Today I want to share the exciting topic of Product Market Fit (PMF), why it plays such an important role in product development and growth, and which frameworks we can use to achieve PMF.
Recently, I listened to a fantastic podcast in which Itamar Gilad (former Head of Growth/Product Manager of Gmail at Google) discussed PMF with Sean Ellis (co-author of Hacking Growth. While PMF is not a new topic, Gilad’s and Ellis’ high expertise and deep insights about it impressed me.
Below are the key takeaways of their conversation:
In short, driving growth without a PMF will lead to a leaky bucket and create a lot of friction. It holds true for startups as well as midsize and large companies. It also applies to a startup launch, new product line development, and even a new feature launch.
The reality is having a great idea and an audience doesn't necessarily equate to having PMF. For B2C companies, you should have at least 40% of users mention in the survey that they don’t want the product to go away. For B2B/Enterprises, you might need at least 6 businesses to be willing to use your product on a consistent basis (say, 6 months) to feel confident that your product has a PMF.
Finding a PMF is not straightforward. Here are some of the biggest challenges in getting it:
- How to chase the right opportunity. In reality, there are a lot of problems that are not easy to solve and build a business around.
- When consumers and companies have built a habit around using a product – even if it’s suboptimal – they may be reluctant to switch to a new solution unless it provides tremendous incremental value.
- Sometimes it's hard to let go of a “great” idea that comes from/is sponsored by the founder, executives, and investors. It's very tempting to build a full product without testing PMF thoroughly.
- Early signals can be misleading if a small subset of the audience (1% to 5%) shows a strong interest in your product. But remember the key question: can you scale it?
- Products that are well perceived by tech press and tech bloggers because they're innovative but only target the group of power users can become a failure. Innovation is exciting, but practicality works for the market.
The podcast had other interesting points about PMF and growth:
- Test new ideas as early as possible to see how users adopt (MVP).
- Think deeply about which values you want to deliver.
- When a product hits PMF, it’s time to invest in growth and expand to 1) create more value, 2) stay relevant to more users, and 3) keep them engaged and retained in the products.
To find PMF, consider adopting the GIST framework to identify a PMF by talking to customers in research to validate your product assumptions.
GIST (Goal - Idea - Step - Task)
- Start with Goals, which tell us what we are trying to achieve to determine PMF.
- Establish many Ideas, which are hypothetical ways to achieve the goals. Use ICE framework to assess ideas and evidence.
- Taking Steps that develop the ideas and test them.
- Lastly is Tasks: learn from the Steps level and decide which one to build.
Disclaimer: What I’m sharing here is my personal point of view and does not represent the views of my current and former employers.
This newsletter was previously sent on September 2021
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