A powerful demand signal is when a company repeatedly tries to hire a person for a specific role but fails due to high turnover or an inability to get the job done. This indicates they are willing to spend significant money on the problem and that the human-based solution is flawed, creating a perfect entry point for software.
Related Insights
When your first users sign up but never return, it's a clear signal of a problem-solution mismatch. Before abandoning the idea, you must interview these users to understand why. Their feedback is crucial data needed to decide whether to iterate or pivot.
A 'dam' represents pent-up demand where users are frustrated and merely 'coping' with the status quo. Introducing a 10x better solution, often via new tech, doesn't create demand; it bursts the dam, releasing a flood of customers who see it as a magical fix for a problem they already have.
When a company consistently misses sales goals, the root cause may not be the sales strategy but a failure in the hiring pipeline. A high employee churn rate combined with an inefficient screening process starves the sales team of the necessary manpower to hit its targets.
Some of the largest markets address needs customers have completely given up on because no viable solution existed. This powerful latent demand is invisible if you only observe current activities. You must uncover the high-priority goals on their mental "to-do list" that they have quit trying to achieve.
Most problems customers describe are "pain points" they won't act on. You can't distinguish these from real, actionable demand ("pull") through interviews alone. The only true test is presenting a viable solution and attempting to sell it. Their reaction—whether they try to pull it from you—is the only reliable signal.
The "Pull Framework" defines demand not by pain, but by observable action. It requires a customer to have an active, unavoidable project, to have already explored existing options, and to find those options insufficient. This is the signal for a product they will eagerly "pull" from your hands, even if it's imperfect.
During validation calls for Merge, prospective customers expressed extreme annoyance with the status quo but were skeptical the founders could technically solve it. This combination was the ultimate signal: the pain was immense, and a successful solution would be highly defensible and valuable.
Founders often over-index on early user complaints. However, if a product addresses a powerful, unmet demand, users will endure significant flaws. The existence of strong market "pull" is a more important signal than initial product imperfections. The market will effectively fund the product's improvement.