Product-Market Fit (PMF) is the singular, most important milestone for any startup. Coined by investor Andy Rachleff, it simply means being in a good market with a product that can satisfy that market.
As venture capitalist Marc Andreessen famously said, "You can feel product/market fit when customers are ripping the product out of your hands... Money from customers is piling up in your checking account."
The Signal Before achieving PMF, every step is a struggle: sales cycles are long, churn is high, and growth is expensive. After achieving PMF, growth is explosive, demand is viral, and money flows easily.
Quantitative signals that you have achieved PMF include:
- Low Churn: Customers stop leaving because they cannot live without your product.
- Organic Growth: Users refer new users without being asked (virality).
- Willingness to Pay: Customers readily pay your price without lengthy negotiations.
- 40% Rule: A common test asks customers how they would feel if the product disappeared. If over 40% say they would be "very disappointed," you have PMF.
The Pivot Stage The entire Lean Startup methodology (Build-Measure-Learn) is designed to help founders iterate their product and business model until they hit this inflection point. Until you find PMF, nothing else—not funding, not hiring, not marketing—truly matters.
Key Takeaway: PMF means the market needs you more than you need the market. It’s the moment you stop pushing your product and start managing the demand that pulls it forward.
