At $1.5M ARR, Briq pivoted from its successful RPA tool to a forecasting product to satisfy VCs who wanted daily active users. The new product was a disaster and was killed within two years, forcing a return to their proven, automation-focused roots.
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After scaling to 300 employees created more problems than it solved, Briq's founder now believes headcount is a poor measure of success. He argues that ARR per employee is the true "flex," promoting capital efficiency and focus over a bloated team size.
Founders can waste time trying to force an initial idea. The key is to remain open-minded and identify where the market is surprisingly easy to sell into. Mercor found hypergrowth by pivoting from general hiring to serving the intense, specific needs of AI labs.
Product-market fit isn't just growth; it's an extreme market pull where customers buy your product despite its imperfections. The ultimate signal is when deals close quickly and repeatedly, with users happily ignoring missing features because the core value proposition is so urgent and compelling.
Basim Hamdi's initial "Construction Data Cloud" concept failed because the industry's 30-year-old legacy systems lacked APIs. This critical oversight forced a pivot to Robotic Process Automation (RPA) to extract data, which unexpectedly became the core of his successful business.
Unlike traditional software where PMF is a stable milestone, in the rapidly evolving AI space, it's a "treadmill." Customer expectations and technological capabilities shift weekly, forcing even nine-figure revenue companies to constantly re-validate and recapture their market fit to survive.
Sales are a vanity metric for product-market fit. The real test is having ~25 customers who have successfully implemented your product and achieved the specific ROI promised during the sales process. If you don't have this, you have a product problem, not a go-to-market problem.
A core investment framework is to distinguish between 'pull' companies, where the market organically and virally demands the product, and 'push' companies that have to force their solution onto the market. The former indicates stronger product-market fit and a higher potential for efficient, scalable growth.
When Fal was debating its pivot, their investor Todd Jackson asked which idea would get to $1M ARR faster versus $10M ARR faster. This framework forced them to evaluate not just immediate traction but long-term market size and velocity. It provided the clarity needed to abandon a working product for one with a much higher ceiling.
The conventional wisdom for SaaS companies to find their 'second act' after reaching $100M in revenue is now obsolete. The extreme rate of change in the AI space forces companies to constantly reinvent themselves and refind product-market fit on a quarterly basis to survive.
