Canary's founders achieved an impressive 50-75% demo-to-close rate in the early days. While this rate decreases as a sales team scales, such a high initial conversion is a powerful leading indicator of product-market fit, proving that qualified buyers want the product once they see it.
Related Insights
After setting a modest goal of signing 10-20 hotels at their first major conference, Canary Technologies signed over 200 in just eight hours. This massive, unexpected pull from the market served as the definitive, visceral signal that they had achieved strong product-market fit.
Many founders mistakenly define Product-Market Fit by revenue (e.g., "$1M ARR"). The correct measure is the ability to predictably create customer value. This is best quantified by a leading indicator for long-term retention, not sales figures, as revenue can be achieved without true market fit.
Even after scaling past $10M ARR, Canary's founder gets back on the phone to cold call customers for every new product launch. This ensures the leadership team directly tests messaging, understands customer objections, and validates the new offering's value proposition before scaling the sales motion.
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.
Initially, customers often "round down," focusing on missing features. A key sign of product-market fit is when they start "rounding up"—their faces light up in demos, and they imagine the product's future potential, forgiving current limitations because they believe in the core value.
The ultimate validation of product-market fit isn't retention or satisfaction scores, but the percentage of new revenue driven by customer referrals. When 30% or more of your new top-line monthly revenue comes from existing customers recommending your product, you've built something people genuinely love and need.
Don't get distracted by the vague goal of "achieving product-market fit." Instead, focus on tangible, measurable signals of traction: Are people buying the product? Is the messaging resonating? Do you have the right sales funnel? These concrete metrics provide actionable feedback that leads to success.
In the early days, Canary's pitch received mixed reactions. However, the strong, visceral "I need this now" response from a few customers was a more valuable signal of product-market fit than getting a polite "that's cool" from everyone. This validates the "10 true fans" principle in B2B.
Founders mistakenly believe a demo should showcase every feature to prove the product works. The real goal is to make the buyer feel understood. Show the minimum necessary to make it 'click' for them that your solution fits the specific demand they just described.
Founder Kyle Hanslovan saw the first signs of product-market fit at just $1.5M ARR. It wasn't about revenue scale, but the realization that the core business functions—demand generation, a fast sales cycle, and scalable service delivery—were becoming predictable, repeatable flywheels that could be systematically improved.
