Thread by @dunkhippo33

There are many confusing things about the definition of product-market fit. How speed factors into it is one of these confusing points.

Today's thread is a deep dive into that.

Read on >>

1) First, what is product-market fit?

I've tweeted about it here a while back:

https://twitter.com/dunkhippo33/status/1153779532110843904?s=20

2) @hnshah has a great compilation of other people's definitions which all get at the same thing:

https://twitter.com/hnshah/status/1154092345073123328?s=20

3) @lennysan has a great blog post on PM fit:

lennysnewsletter.com/p/what-it-feel…

4) The tl;dr on all these sources is that PM-fit is this weird combo of:

1) making something ppl want
2) that someone will pay for
3) such that the unit economics + cust acq costs are scalable and repeatable per the revenue
4) such that *eventually* the biz could be profitable

5) But implied in all of these definitions is this sense of speed. When VCs talk about finding PM-fit, they often equate it to speed.

Very typically a company that has 30% MoM growth is considered to have PMfit.

6) When you see a company growing say 50% MoM for sustained periods of time, often you hear ppl say, "They have strong PM fit".

7) But this isn't always true - I can give you a restaurant coupon code for $10 and you'll use it. And lots of ppl will use it. But, it doesn't mean that once the code is gone, the growth will continue.

This is a problem that happens to VC backed companies all the time.

8) Moreover, there are also companies that grow at 10% MoM organically that have strong retention. But the unit economics are "too tight" to be able to spend some serious cust acq dollars on marketing channels.

Yet this company could have PMfit.

9) We need to separate *speed* of growth from the implied definition of PMfit.

PMfit is one thing.

But many investors - especially VCs - are ALSO looking to back companies with high velocity of customer acquisition (which may or may not have PMfit).

10) Why does this matter? I was talking w/ a founder recently about this. He has great customers who are getting strong value from his product.

But the customer acquisition is hard for a variety of reasons. And so he's at a crossroads.

11) Clearly something is working. I would say the product probably even has PMfit or is close. Customers pay for it. The unit economics work. Customer love it. And it's making the world better.

12) But for a variety of reasons (irrelevant to this thread), the customer acquisition will be hard to speed up.

This isn't a bad thing. But I think it forces founders to dig deep and think about what they really want in life.

13) Do you want to have a particular sort of impact with your product even knowing the cust acq process will be slower?

Or do you want to try to find a faster path which may be less fulfilling but a way easier product to sell?

14) There isn't a right or wrong answer, but I think it's a decision tree that a lot of founders face.

Both can find PMfit.

But is it more impt for you to go faster? Or to build the thing you want to build that will be more meaningful specific impact to you and a slower path?

15) I have friends who would keep tossing out ideas if the market pull wasn't fast enough. Until they finally landed on building a product with really strong market pull.

I don't know if that particular idea was personally fulfilling but the company grew really fast.

16) On the flip side, if you are set on a particular product knowing that the growth may not be as fast, that may preclude oneself from VC money.

That's not a bad thing, but then there's a tradeoff in the capital that is accessible.

17) These are tough questions that don't have correct answers, but when you only have 1 life, they are impt.

For your startup, what does success look like to you? What is the 1 thing you are optimizing for? Is it money? Is it mission? Is it helping a specific group of ppl?