Product market fit definition / meaning

Product market fit is one of these very important terms for tech related startups. However if you are not a tech entrepreneur, and don’t follow startup news, you probably wouldn’t hear it much. If you happen to be interested in startups pitches, you will often notice investors are always looking for startups that have achieved this holy grail.

The term product-market fit was coined by Sequoia Capital founder Don Valentine. Venture capitalist Marc Andreessen later popularized the term in the mid-2000’s.

The term is mostly defined as : “Product/market fit means being in a good market with a product that can satisfy that market.”

We should differentiate between product/market fit and problem/solution fit when measuring a company’s customer base.
Meaning, when analyzing a customer’s desire, companies need to be sure they are measuring desire for the product or service—not just for a solution.

One heuristic is to understand the metric of “must have”. This metric for product/market fit is if at least 40% percent of surveyed customers consider the product or service as “must have”.

How to find if you have achieved product-market fit?
If the following 5 metrics are above average, you might be on the right way:
1. Bounce Rate,
2. Time on Site,
3. Pages per Visit,
4. Returning Visitors,
5. Customer Lifetime Value.

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Abdallah Alaili

I'm a serial entrepreneur (mostly tech) and micro-investor (tiny), this is a blog to learn from other entrepreneurs and spread the wisdom to many more. You can find me on: Instagram - Twitter - Linkedin - more about me