Why is a product market fit so important for startups?
Here’s a short breakdown why a product market fit is inevitable for startups and what4 signs of a product market fit are.
Definition
First, let’s start with the question: what is product market fit?
Product-market fit describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability.
Product-market fit is key for numerous reasons
It proves that you’ve created a product people want. And — all the struggles involved with user acquisition become easier once validation is established.
Hitting the sweet spot in a market vs. creating a new one are two entirely different scenarios when building your business.
If you can find a way to gracefully “fit” into an existing market, your chances of success are greater than if you try to create a new one. Creating all the awareness and education needed to generate demand for something that doesn’t already exist is expensive — and failure carries more risks.
However, as a startup, you should aim to achieve product market fit.
Why? Because it will tell you whether or not what you are building solves a real problem that a large enough market hast. Without clarity on this, you could continue investing in building something that is not commercially viable.
Signs of a product market fit
-Exponential (organic) growth in means of high conversions, traction, and sales.
-Lifetime value is 3x greater than customer acquisition costs.
-Very high user retention
-Disappointment among users or customers if you would turn down your product or remove it from the market.
