Product-Market Fit - Reading the Audience

Copyright © 2018 Thomas Lemström
Product-Market Fit
Thomas Lemström

January 30th, 2018

linkedin.com/in/thomaslemstrom/

Agenda
Part 1: Product Market Fit – What does it mean?

Part 2: How to apply PMF as a conceptual tool?

Part 3: Going beyond PMF

Key Take-Aways

Part 1
Product-Market Fit – 
What does it mean?

Basic Deﬁnition
Product Offering*
Needs and Opportunities in the Markets
Are we getting
it right?
Product-Market Fit – What does it mean?
* The totality of the products and business model of a company

Needs and opportunities may not
be obvious nor reliably
quantiﬁable when creating a new
product category that has no
existing demand.
Product Offering
Needs and Opportunities in the Markets

PMF is not binary, nor
static. It’s a matter of
degree, and it involves an
ongoing process of iterating
the product for a continually
evolving markets.

Part 2
How to apply PMF as a
conceptual tool?

It’s a way to assess
organic growth potential.
( PMF + Scalability  
= Attractive Investment. )
Product-Market Fit – Conceptual Tool

Ideally…
Start-Up PMF
Rocket
Fuel for
Scaling
Up
“Shangri-
La”
Background image courtesy of pixabay.com (CC0)

“Entrepreneurs should build the
product that everybody wants before 
raising a boatload of cash to build the
company. [—] But sometimes, things
aren’t so clear.”
– Ben Horowitz

Some Indicators of PMF
•Interest (media, competitors etc.),
resonating with an audience, buzz,
virality, recognition,“traction”

•Ease of user acquisition, cost of
customer acquisition, repeat sales

•Sustained activeness and volume of use

•Customers’ ability to recognise and
communicate the value of the product

•Customer happiness, loyalty

•Word of mouth

PMF metrics vary
amongst businesses*…
and you get what gets measured, so
choose wisely.
* e.g. consider criteria for desirable recurring use in
social media vs retail

Optimising and Pivoting
• Gaining traction may depend on
relatively small changes to the total
product oﬀering (optimising)

• Survival may require total overhaul of the
business concept (pivoting)

Use metrics (and
heuristics) to assess PMF
and thereby decide the
right balance of
investments in product
development and growth.

Poor PMF (“rejection”)
Go back to the drawing board. Do radical
re-design of the business concept. 
Some PMF (“promise”) 
Optimise the offering based on customer
feedback, competitive insight etc.
Good PMF (“commitment”) 
Invest in growth – “Add wood to the ﬁre”

Something to think about: Who do we
focus on when searching for growth?
The Typical User
The Early 
Adopter
“The Future
Customer”
The Power 
User
The Occasional
User
The “classics” on this topic are:

“Crossing the Chasm” (Geoﬀrey A. Moore)’

Theory of the diﬀusion of tech (Everett Rogers)

Above all, choose a great market.
Even a mediocre team with a very
basic product can be successful
(for a while) if the market is great.

Part 3
Going beyond PMF

Excellent PMF means
that your customers
are selling for you.
Product Market Fit – Going Beyond

Try to understand motivations
behind surface metrics
User Experience and Customer Satisfaction

• Task eﬃcacy

• Social interaction, belonging, and
identity

• Learning, creativity, self-actualisation

• A Magic Moment: designing the
product and service to take the
customer to a place of delight. Wow!
A-ha!
• Novelty, authenticity, prestige etc.
Cognition,
Psychology,
Social
Agency,
Bounded  
rationality
…

PMF is not all that matters
for growth
• Markets alone matter hugely

• The eﬀects and dynamics of
the team

• Expansion through
acquisition and merger

• The complex dynamics of
growth of companies as
socio-economic systems

• etc.
IT GETS COMPLEX

Key Take-Aways
• Product-Market Fit represents a product’s potential for organic
growth.
• Selection of the target market is primary. In a great market even
a basic product meets an enthusiastic audience.

• Narrowing the target market makes it easer to provide
extraordinary (diﬀerentiated) service for customers.

• Growth results from learning: get feedback, view sales activities
as a central part of product development.

• Credible PMF should be achieved before negotiating for venture
capital and investing in scaling up production.

• The selection of metrics for PMF is important as it guides the
company to certain direction.
• Go behind metrics to understand motivations  
( Design Thinking)

Product-Market Fit - Reading the Audience

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