Answering the product-market fit question wrong

Giff Constable lean

For a decade now, entrepreneurs have been asking themselves “do I have product/market fit?” They usually answer it wrong. Product-market fit does *not* merely mean growth. Growth can be forced for a time (even years) with clever hacks and heavy spend, but the piper comes calling with churn rates. It’s easy to *want* to believe that one has pm-fit, but it’s a dangerous mistake to make, especially if you’ve raised funding (when you feel even *more* pressure to make that mistake). Your investors will want to believe that you are in the “scaling” phase, but premature conclusions about pm-fit lead founders to “professionalize” too soon and waste money on empty growth.

By professionalize, I mean moving from elite generalists to specialists too soon, hiring managers with impressive resumes who don’t know how to be scrappy, and bloating the cost base. You need to be cautious hiring post pm-fit executives when you are pre-pm-fit, no matter how fancy their brand. They’ll need too much budget and too many heads. They’ll focus on their individual initiatives rather than the company’s true singular initiative: get to pm-fit. It’s hard because those are exactly the kind of execs your investors will want you to hire, and you’ll feel pressure to hire leaders who have “been there, done it” — just make sure that “done it” means breaking thru pm-fit, not merely scaling.

When you value scaling over true pm-fit, you spend too much on customer acquisition, chase too many customers and too many value props, and pursue short-term growth hacks over building core strength. Empty growth is like cotton candy — it might feel good for a second, your metrics will look good for a while, but it’s not very good for you and you probably overpaid.

The result of all of this is high burn, and the reset is *very* painful, although survivable if you do it early enough.

Ask yourself, “what is the one thing you do amazingly well for customers that delivers real value and makes them stick around?” When you have that locked in… when you are desperately struggling to keep up with that growth, then you have pm-fit.

This was originally a tweetstorm:

here’s @pmarca’s original post on pm-fit and a 2017 follow-up from @a16z