Introducing Eniac’s PMF Q&A: What is product-market fit, anyway?

By Hadley Harris, Vic Singh, and Anthony Ha

If there’s one thing we’re focused on at Eniac Ventures, it’s helping our founders find product-market fit.

The term gets thrown around so often that it’s easy to assume every founder knows exactly what it means. But like many simple, powerful ideas, PMF can take on different meanings depending on who’s using it.

The most popular definition comes from a 2007 blog post by Marc Andreessen, who wrote that PMF “means being in a good market with a product that can satisfy that market.”

He also said founders can “always feel” when product-market fit is or isn’t happening: When you don’t have PMF, “customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close.” Whereas if you’ve got it, “the customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers.”

Looking for something more specific than you-know-it-when-you-see-it? Well, there’s Benchmark’s Andy Rachleff, who coined the term (after borrowing the underlying idea from Sequoia’s Don Valentine).

Rachleff offers four different ways to judge whether you’ve got PMF depending on whether you’re in a consumer or enterprise business. On the consumer side, look for “exponential organic growth” and at your net promoter score; on enterprise, look at sales yield (“the contribution margin of a sales team divided by the total cost to field the sales team”), as well as customer response when you pull the product after an initial trial: “If the customer doesn’t scream, you don’t have product-market fit.”

Still not enough definitions for you? Here at Eniac, we believe PMF is closely tied to the idea of market pull. As we wrote last year:

The true test is whether you’re getting “pull” from the market, or if you still have to “push” your solution onto the world. When we meet with founders who’ve found true PMF, they’re usually incredibly stressed — not because they’re hustling for the next sale, but because there’s so much positive word-of-mouth that they’re struggling to on-board all the new customers, and to scale the infrastructure needed to support them.

Other signs that you have PMF: Customers are loyal, happy, and demanding new features at a rapid clip; willingness to pay isn’t an issue; and if it’s a B2B product, you see organic expansion within a customer organization.

It’s also worth noting that finding PMF is one thing, while maintaining it is another: Just because you have it initially doesn’t mean you’ll always keep it. You have to continue iterating to meet growing demand and a diversity of customers, while also keeping the core product intact.

Indeed, it’s important to remember that PMF isn’t purely binary. It exists in different degrees — it’s not just a question of whether you have it, but whether it’s stronger or weaker (one of our founders has talked about trying to make his product-market fit “tighter and tighter tighter”).

We don’t necessarily think that any of these definitions (even our own!) is more correct than the others. They’re not really mutually exclusive; it’s more like everyone’s trying to pin down different aspects of this big idea.

Of course, where PMF becomes meaningful is not in a general description, but rather a specific, warts-and-all narrative: How a company does or doesn’t find PMF, with all the inspiration and missteps along the way.

That’s why we’re excited to kick off Eniac’s PMF Q&A: An in-depth interview series with our portfolio founders, where they talk about their search for PMF and what they think they’ve learned in the process. These founders come from companies at different stages, in fields ranging from mobile analytics to robotics, connected only by the fact that we think they’ve found PMF.

They don’t always agree with each other — or with us! — about what PMF looks like, but in our view, that’s part of the fun. We’re learning a lot from these interviews, and we can’t wait to share them with you. Come back next week for the first, with one of our smartest founders in AI.