Product-Market Fit isn't just any hockey-stick growth. The founder of Jeeves defines it as the moment your target customers—the ones you want to grow with long-term—start coming to you organically. Early growth from non-ideal customers can be a false positive.
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Runway's founder knew he had found product-market fit not just from revenue, but when a major customer, AngelList, began running its business on the platform and became an evangelist. Deep adoption by a respected company is a far stronger signal of PMF than early sales traction alone.
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.
Product-market fit isn't a sudden switch but a palpable shift in momentum. As a founder, you feel the change from pushing against the current (hard selling with little traction) to suddenly being pulled by it (easier sales, inbound interest). This directional change in velocity is the clearest signal that you're onto something.
This visceral analogy reframes product-market fit as an uncontrollable, overwhelming demand from the market. It's not just positive metrics; it's a state of being swarmed by customers. If you don't feel this intense 'market pull,' you haven't truly achieved it and must keep iterating.
The true indicator of Product-Market Fit isn't how fast you can sign up new users, but how effectively you can retain them. High growth with high churn is a false signal that leads to a plateau, not compounding growth.
ElevenLabs' VP of Sales dismisses early traction as true product-market fit (PMF). He argues a company only has PMF after generating over $10 million in revenue from one specific Ideal Customer Profile (ICP). Until then, sales should be treated as an ongoing experiment across different verticals and personas.
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.
You've achieved product-market fit when the market pulls you forward, characterized by growth driven entirely by organic referrals. If your customers are so passionate that they do the selling for you, you've moved beyond just a good idea.
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.
The unambiguous signal of Product-Market Fit (PMF) isn't a magic number in your analytics. It's when customer pull becomes so strong that it breaks your supply chain, logistics, and team capacity, forcing uncontrollable growth even without marketing spend.
