The concept of "The Real Product Market Fit" is often misunderstood by founders. It is when customers buy the product as fast as it can be made, usage grows rapidly, and money accumulates in the company's checking account. Many founders mistakenly believe they have achieved product market fit due to intellectual convenience. Achieving product market fit is determined by growth and profitability, not just having customers or experiencing growth. Founders should focus on optimizing for growth, retention, and profitability simultaneously. Building a successful company is not a single variable problem and revenue is not the sole indicator of success. Customer satisfaction and cost of acquiring revenue should also be considered. Socialcam, a platform with a large user base, failed to achieve product market fit due to lack of monetization and poor user retention. Justin.tv, later known as Twitch, had significant revenue and profit before finding product-market fit. It took them six years to realize game streaming was their key to success. Communication with users and persistence are crucial in the journey to finding product-market fit. Some companies take a long time to achieve success, highlighting the importance of perseverance and avoiding premature selling.
The Real Product Market Fit
The Real Product Market Fit is a concept that many founders mistakenly believe they have achieved when they haven't. It is important to truly understand what needs to be built before optimizing the product and hiring people. According to Mark Andreesen, product market fit is when customers buy the product as fast as it can be made, usage grows rapidly, and money accumulates in the company's checking account. Many people mistakenly think they have achieved product market fit due to intellectual convenience.
Why do many founders think they have product market fit when they don’t?
Many founders mistakenly believe that building a company is what leads to success, but the real challenge lies in solving the problem at hand. Product market fit is often misused and misunderstood. It is when you have built something that customers want and are using in an explosive and destructive way. Achieving product market fit is a strong indicator of success, but many founders fail to achieve it. It is determined by growth and profitability, not just having customers or experiencing growth. Founders should focus on optimizing for growth, retention, and profitability simultaneously.
Building a successful company is not a single variable problem
Building a successful company is not a single variable problem. Revenue is often used as a metric, but it is not perfect. Other factors such as customer satisfaction and cost of acquiring revenue are important to consider. Achieving product market fit is a challenging process that requires time and dedication. Cheating or pretending will not lead to success. It is necessary to be passionate and comfortable with failure in order to eventually achieve product market fit.
- Revenue is not the sole indicator of a successful company
- Customer satisfaction and cost of acquiring revenue should also be considered
- Achieving product market fit takes time and dedication
- Cheating or pretending will not lead to success
- Passion and comfort with failure are necessary for achieving product market fit
Socialcam didn’t hit product market fit
- Socialcam, a platform with a large user base, failed to achieve product market fit.
- Lack of monetization and poor user retention were the main reasons for its failure.
- Despite being a top app in the App Store, Socialcam struggled to keep users engaged.
- The platform did not have a sustainable business model.
Justin.tv had $1M in profit before reaching product market fit
Justin.tv, later known as Twitch, was generating $8 million in revenue and $1 million in profit with 30 million monthly viewers, but struggled to find product-market fit. After six years, they discovered game streaming as their niche and quickly took off. The company's success was attributed to their existing technology and resources.
Key points:
- Justin.tv, now Twitch, had significant revenue and profit before finding product-market fit.
- The company faced challenges in consistent growth and monetization.
- It took them six years to realize game streaming was their key to success.
- Twitch's success was facilitated by their pre-existing technology and resources.
Takeaway:
- Communication with users could have helped Justin.tv achieve product-market fit earlier.
- Persistence and knowing when to quit are crucial in the journey to finding product-market fit.
Some companies take a long time
Some companies take a long time to achieve success, highlighting the importance of perseverance and avoiding premature selling. Key points include:
- The need for patience and persistence in building a successful company
- The potential negative consequences of selling too early
- The importance of staying focused on long-term goals and not being swayed by short-term gains.