Read time: 4 minutes

Hey!

Sam here 👋

If you want your business to be successful, you need to get one thing right: product-market fit.

It’s the #1 factor successful startups have in common.

It means people are not only interested in what you’re selling, but they are actually willing to pay and come back for more.

6 steps for the Lean PMF Process

1. Determine your target customer

2. Identify underserved customer needs

3. Define your value proposition

4. Specify your Minimum Viable Product (MVP) feature set

5. Create your MVP prototype

6. Test your MVP with customers

But, how do you know you’ve achieved PMF, what are the signals you should pay attention to?

The key is in your customers.

We’ll go over exactly what you need to ask to make sure you’re on the right track.

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How do you know you’ve finally made it to the magic land of PMF?

There are 3 main metrics you need to keep an eye out for, growth, engagement, and retention.

Growth tells us whether we can scale our product to more as time goes by.

If you struggle to grow, you haven’t arrived yet.

We also know that growth alone won’t get you there, you also need to make sure that users stay.

Retention tells us that the market is satisfied with our product.

Ultimately, you want to see a flat retention curve. Like this:

But retention takes a while to assess (≈12 months) and we need to see leading indicators that we’re on the right track.

For that, we need to look at engagement.

Why?

1. You are tracking all your users this way, so you’re not missing anyone.

2. Has the highest correlation with retention.

As you can tell from the image above, you should first focus on retention by improving your product, and then you can focus on improving growth.

BUT — as much as it's critical to track these metrics, you NEED to know if your assumptions about the market and customers are right 👇

How to validate your PMF assumptions

The best way to do this is through your customers. They hold the key.

There are 2 ways to get PMF input from your customers:

✍️ Surveys

👥 Interviews

Which one should you do?

A good rule of thumb is:

Do you have 100+ active users?

✅ If yes, consider sending the questions as a survey.

Do you have <100 active users?

✅ If yes, ask the questions in an interview.

✅ I recommend interviewing between 6 and 12 customers.

Next, you'll find questions to assess product-market fit by Matt Gallivan.

He's a world-class researcher that's led research teams at NPR, Facebook, Airbnb, & now at Slack

Let's dive in.

Using surveys to validate

Send a survey to 100+ of your active users and ask the following questions:

1. How would you feel if you could no longer use the product?

• Very disappointed

• Somewhat disappointed

• Not disappointed

→ If the “Very disappointed” percentage is over 40%, you are on track to PMF.

2. Compared to other ways you do [essential function of your product], using this product to do it is generally:

• Much better

• Somewhat better

• Neither better nor worse

• Somewhat worse

• Much worse

→ Look for signs that your product is moving in a positive direction.

3. The last time you did X, what product or tool did you use to do it, and why? [Open-ended]

→ Since this is a behavioral question, it will give you an idea of whether your product is being used in the context and times you think it should be.

4. What do you think sets us apart from other solutions you’ve used?

→ Understand your differentiators that will become your competitive advantage

5. How likely is it that you would recommend [Product] to a friend?

6. What would make you more likely to recommend [Product] to others?

→ These 2 last NPS questions are a quick and easy way to assess customer satisfaction and loyalty. When customers are willing to recommend a product, it shows that it is meeting their needs and providing value.

Using interviews to validate

As a rule of thumb, try to interview between 6-12 of your best customers.

You typically begin to see patterns after the eighth interview.

Pro tip: Don’t stop until you see patterns emerge from your conversations.

1. Walk me through the last time you did X [essential function of your product].

For each key decision you made along the way, tell me a bit about why you made those decisions.

→ What to look for: Understand how your buyer typically goes about the key tasks your product enables

2. What are the different products you use to do [essential function of your product]?

What are the best and worst parts of using those products?

The last time you did [X] using this product, why did you use it instead of something else?

→ What to look for: How well-suited your product is to replacing or improving that work

3. Why did you try this product in the first place?

What were you hoping it would do for you?

How well has it delivered on that hope?

→ What to look for:

• Excitement about your product

• Acknowledgment of the higher value compared to competitors or alternative solutions

Your customers should be able to tell you why your product is preferred over alternative solutions.

Lastly, try to uncover if your product's assumptions are correct.

• Are people experiencing the problem your product sets out to solve?

• What motivated them to try it in the first place?

• What was the magical way they hoped it would make their lives better?

It's always fascinating to get a glimpse into why people use what you've built and how they use it in their daily lives.

These insights can open up new doors and help you fine-tune your product to meet the needs of your market.

That’s all for now!

Thanks for reading! If you have any questions or feedback, just hit reply.

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If you found this helpful, please forward this email to 1 friend or colleague. They'll appreciate you, and you'll help grow the community.

🔍 Sam Pick’s - resources worth your time

• How Superhuman built an engine to find PMF by Raul Vohra

• The Playbook to achieve PMF by the Lean Startup Co

• How to find PMF by David Rusenko from YC.

Whenever you are ready, there are two ways I can help you:

• Work with me 1:1 to help you build a defensible growth engine to scale your business to $10MM ARR. Let’s chat.

  Ideal if you're a founder who reached $1M and now wants to scale.

• Get unstuck in 60 minutes in a high-intensity session to solve a specific challenge. Book a strategy call.

Until next time 👋

Sam