What Is Product-Market Fit (And Why Is It Important?)
Wealthfront co-founder Andy Rachleff and investor Don Valentine were the first to define and coin the term product-market fit (aka product/market fit or PMF).
Later, Marc Andreessen, partner at Andreessen Horowitz, helped popularize the concept. To Andreesen, product/market fit means being in a good market with a product that can satisfy that market. In other words, once you have identified a target customer and iterated your product until it meets their needs, you have found PMF.
The thing to note, however, is that the product has to fit the market, not the other way around.
“When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.” – Andy Rachleff
PMF is a critical concept for startups because it often plays a significant role in determining the future of the company. Marc Andreessen aptly highlights the importance of PMF: “The life of any startup can be divided into two parts: before product/market fit and after product/market fit.”
How Do You Know If You Have PMF?
Being in a good market with the perfect product is easier said than done. Since there are so many variables in the equation, there is no one-size-fits-all formula. Fully achieving PMF depends on the specifics of the startup, but it will usually be a mix of revenue, engagement, and growth.
The most common ways to assess product-market fit are by:
- Analyzing retention cohorts: This involves digging in product retention cohorts looking for sub-segments of users who are sticking around, showing regular cadences of use for your product’s core functionalities.
- Running a PMF survey: Sean Ellis, a marketing expert and entrepreneur, devised the PMF survey (aka the Sean Ellis Test), a seven-question survey designed to evaluate if a startup has found PMF.
Educating yourself on the topic will definitely give you a leg up in figuring out what PMF means for your startup. It’s why we put together this list of the best books on product-market fit:
The Best Books on Product-Market Fit in 2023:
The Lean Startup by Eric Ries
The Lean Startup is the book that introduced the lean methodology to the world of startups. Since then, it has become a must-read business book for everyone, from new entrepreneurs to professionals wanting to familiarize themselves with the fundamentals of the Lean Startup. The book covers the foundations, from the importance of MVPs to iterating a product to finding PMF. Ries uses real-life examples from his businesses and case studies from startups like Grockit and Dropbox.
FOCUS Framework by Justin Wilcox
In his book, FOCUS Framework, entrepreneur Justin Wilcox walks you through the path to finding PMF in detail. The book is all about helping you reach PMF by running experiments with your customers, not on them. Even though, in some ways, the promise may be hard to live up to, FOCUS is still a very complete book filled with good ideas.
The Lean Product Playbook by Dan Olsen
With The Lean Product Playbook, Dan Olsen aimed to create an easy-to-follow guidebook to iterate a product to PMF. The book is an insightful read with a ton of great info for product managers. It’s a good book with a lot of actionable advice, but it’s very software product-focused, and it may be best for more established companies launching new products.
Testing Business Ideas by Alexander Osterwalder and David J. Bland
One of the three books of the Strategyzer series, Testing Business Ideas explains the importance of systematic testing to iterate, grow, and finally reach PMF. Though the book focuses more on testing and experimentation for larger organizations, it provides a lot of useful and informative guidelines to minimize the risks of ventures.
From Idea to Product/Market Fit by Omar Mohout
In From Idea to Product/Market Fit, former tech entrepreneur and professor of entrepreneurship Omar Mohout explains why founders don’t need to know all the answers upfront. Instead, he highlights the importance of starting with the right questions and figuring out how to find the answers. Although the book is more of an introduction than a detailed guide, Mohout’s guidelines are clear and effective.
Product-Market Fit Analysis by Matt Brocchini
Matt Brochini is a technology and education entrepreneur and executive. He has developed the Quantitative Product Market Fit or simply QPMF concept with Chris Sorensen, an award-winning start-up executive and strategist. In his book Product-Market Fit Analysis, Brochini explains the innovative methodology of quantifying PMF in depth. The approach helps companies assess and improve their market fit. Although there are good ideas in the book, it tends to get mixed reviews from readers.
Trajectory: Startup by Dave Parker
Trajectory: Startup is one of the most recent books on this list. It builds on the startup and investment experiences of Founder Institute and TechStars alumnus Dave Parker.
The book offers a good summary of the steps from idea to product-market fit in a B2C context. There’s solid advice in the book–including many examples of revenue models. However, the book might be better for founders interested in raising VC funding than bootstrappers.
Lean B2B by Étienne Garbugli
Lean B2B meticulously covers the process of going from idea to PMF in B2B. It offers step-by-step guidance and provides case studies from experienced B2B entrepreneurs. The book will help you understand the differences between B2B and B2C startups and reach PMF. If you’re in B2C, this might not be the book for you.
Summarizing the Best Books on Product-Market Fit
Finding product-market fit is a lot harder than it looks. To clearly know what you’re trying to achieve and have actionable guidelines for iterating your startup to PMF, arm yourself with the most appropriate books for your needs.
No matter the type of product you’re working on, our list of the best books on product-market fit should have you covered. For new and updated articles, check back the blog.
More on Finding Product/Market Fit:
- Do You Have Product-Market Fit? Here’s How to Tell…
- The *Real* Metrics of B2B Product-Market Fit for Startup
- How to Define Product-Market Fit in 2023
- How Much Time Do You Need to Reach Product-Market Fit in B2B?
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