Product-Market Fit: Signals, Metrics, and How to Know
Product-market fit (PMF) is when your product satisfies a strong market demand. You'll know when you have it. Based on TBPN community founder experiences, here's how to recognize and measure PMF.
Marc Andreessen's definition: "Being in a good market with a product that can satisfy that market." When you have PMF, you can feel it—customers pull product from you, not you pushing it on them.
Qualitative Signals
Users desperately need your product: They'd be very disappointed if you shut down.
Word-of-mouth growth: Users tell friends without you asking.
Fast sales cycles: Prospects buy quickly, minimal convincing needed.
Low churn: Customers stick around, renew without thought.
Usage exceeds expectations: Users use product more than you expected.
Feature requests align: Multiple customers ask for same things.
Quantitative Metrics
40% rule (Sean Ellis test): Survey users "How would you feel if you could no longer use this product?" If >40% say "very disappointed," you have PMF.
Retention curves flattening: After initial drop, cohorts retain at stable rates.
NPS >50: Strong Net Promoter Score indicates PMF.
CAC payback <12 months: Acquire customers profitably.
LTV/CAC ratio >3: Customer lifetime value significantly exceeds acquisition cost.
Organic growth >20%: Word-of-mouth drives meaningful growth.
Growth Indicators
Before PMF: linear or flat growth despite marketing. After PMF: exponential growth, hard to keep up with demand. Channels that didn't work start working. Conversion rates improve across funnel.
By Company Stage
Consumer product PMF: Daily active users, retention day 1/7/30, viral coefficient >1, organic growth.
B2B SaaS PMF: Sales cycle shortening, inbound leads increasing, expansion revenue growing, logo churn <5% annually.
Marketplace PMF: Both sides growing, liquidity improving, transaction velocity increasing.
False Positives
Paid growth masking weak PMF—turn off ads and growth stops. Early adopters love it but mainstream doesn't. Vanity metrics look good but business metrics weak. One segment loves it but doesn't scale.
What to Do Before PMF
Talk to users constantly, iterate rapidly based on feedback, focus on retention over acquisition, narrow your target customer, measure everything. Don't scale marketing before PMF—waste of money.
Founders searching for PMF, often working from their home offices, talk to dozens of users weekly according to TBPN discussions.
What to Do After PMF
Double down on what's working, scale go-to-market, hire to accelerate growth, raise money if needed to capture market, maintain product quality while growing.
Maintaining PMF
PMF isn't permanent. Markets change, competitors emerge, customer needs evolve. Continue talking to users, watch metrics closely, innovate continuously. PMF is ongoing process, not destination.
Common Mistakes
Scaling before PMF (burning cash with no return), declaring PMF prematurely (fooling yourself), ignoring qualitative signals, focusing on vanity metrics, building for everyone instead of someone.
The TBPN Founder Perspective
According to TBPN podcast discussions, you know PMF when: users beg for product, growth happens without pushing, team can't keep up with demand, investors start calling you. Before PMF feels like pushing boulder uphill. After PMF feels like hanging onto rocket. Connect with founders who've found PMF—they're wearing TBPN caps and happy to share lessons learned.
Conclusion
Product-market fit is unmistakable when you have it. Users love your product, growth is organic, metrics are strong. Until then, iterate relentlessly based on user feedback. Don't fool yourself with vanity metrics—PMF shows up in retention, growth, and user sentiment. Keep searching until you find it.