Even a company with significant revenue can be stuck in the "problem-market fit" stage if it introduces too much complexity. Pursuing multiple products, ICPs, or go-to-market motions dilutes focus and exponentially increases difficulty, hindering the ability to scale effectively.
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Many businesses reach a million in revenue through sheer effort but then stall. The shift to scaling requires achieving product-market fit, which creates leverage and pulls in customers, leading to exponential profitability instead of diminishing returns from just pushing harder.
The Castos founder decided to build a second product only after a year and a half of failing to grow his core business, even after hiring top marketing talent. This ensures a new product isn't a premature distraction from a solvable growth problem.
The idea that startups find product-market fit and then simply scale is a myth. Great companies like Microsoft and Google continuously evolve and reinvent themselves. Lasting success requires ongoing adaptation, not resting on an initial achievement.
The moment you find product-market fit is not a time to celebrate; it's a signal that competitors will soon flock to your space. The founder’s immediate reaction was paranoia and an urgent need to build a moat, raise capital, and scale aggressively. The discovery of 'gold' means you must instantly shift from exploration to defense.
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.
Founders often mistake $1M ARR for product-market fit. The real milestone is proven repeatability: a predictable way to find and win a specific customer profile who reliably renews and expands. This signal of a scalable business model typically emerges closer to the $5M-$10M ARR mark.
PMF isn't a fixed state achieved once. It's a continuous process that must be re-evaluated at every stage of growth—from $1M to $1B. A company might have PMF for one scale but not for the next, requiring a constant evolution of strategy and product.
Having paying customers doesn't automatically mean you have strong product-market fit. The founder warns against this self-deception, describing their early traction as a "partial vacuum"—good enough to survive, but not to thrive. Being "ruthlessly honest" about this gap is critical for making necessary, company-defining pivots.
Many founders fail not from a lack of market opportunity, but from trying to serve too many customer types with too many offerings. This creates overwhelming complexity in marketing, sales, and product. Picking a narrow niche simplifies operations and creates a clearer path to traction and profitability.
