5 ms·

He's being a bit of a stickler here about product-market fit. I wonder if there are any counterexamples, where we can say that there is strong product-market f

by jawns 5y ago

He's being a bit of a stickler here about product-market fit. I wonder if there are any counterexamples, where we can say that there is strong product-market fit without an immediate tsunami of demand. What about the case where purchases tend to be large but infrequent or consist of long-term contracts? In that case, wouldn't you be able to say that you've identified product-market fit at some point earlier than when the actual purchases are made?

bingohbangoh 5y ago
There’s also the early days when you’re trying to light tinder with flint lock. You still need to get the fire going.
randomdata 5y ago
The definition of product-market fit indicates that it is about strong market demand, so it would seem that the tsunami of demand is required. That does not mean a successful business requires product-market fit. Weak market demand can still provide a great business and strong market demand is not a guarantee of business success. One can always play the game of semantics, of course.
- ghaff 5y ago
  It sounds like semantics to me. If I start a company that makes a $100K machine that genuinely increases efficiency/saves money/etc. in some industry used to buying expensive machines, I might reasonably hope to create a successful business. I would less reasonably hope to be able to sit back and watch the tsunami of demand roll in.
  - rileymat2 5y ago
    It would also apply to government RFP processes.
  - randomdata 5y ago
    And when you have products like that you don't necessarily need strong demand. A small handful of dedicated clients willing to spend incredible amounts of money due to you controlling the supply can create a very successful business. In fact, the article talks about such businesses. Looking to achieve product-market fit is particular to certain businesses (the kind Y Combinator likes to invest in) who are looking to expand to a wide audience, not necessarily something all businesses should be striving for.
    - danielmarkbruce 5y ago
      What you are describing with "small handful of clients willing to spend incredible amounts of money" is very strong product market fit. The market is just small.
      - randomdata 5y ago
        I am not sure I agree. Demand is weak. There are few customers and they buy rarely. It just so happens that there is also very little supply, so the price can be high and in those high prices a very successful business can be built. On the flip side, as a farmer, I have found what is essentially perfect market fit. Nearly every person on earth wants what I produce. The problem for my business is that the supply is also huge, so I can't charge much. Often I lose money. It's a living for me, but not the greatest business or something investors are going to be throwing money at.
        danielmarkbruce 5y ago
        People buy cars rarely. Ferrari doesn't sell many cars. Ferrari has product market fit. The size of the market and the frequency of purchase are independent of product market fit. Farmers have great product market fit. They sell a commodity and have little/no pricing power and thus earn pretty low returns on capital. Product market fit is one thing. Market size is another. Frequency of purchase is another. Competitive advantage is another. Building a big successful business requires getting many things right, not just getting product market fit. The reason folks at YC (and others) harp on about product market fit is that they seem to see a lot of companies trying to grow before they have it - which is crazy. It doesn't mean product market fit is the only thing.
dasil003 5y ago
Keep in mind Michael Seibel is a co-founder of Twitch. Twitch is on extreme end of the monetization scale where it's success depended entirely on whether they could add free users fast enough to justify sufficient investment to bridge the gap until they could monetize via ads. The other end of the spectrum is enterprise software. In between you have self-service SaaS, premium consumer, and freemium consumer products. Each of these has very different requirements for what traction look like, all of it significantly less a pure ad-driven monetization like Twitch. The other dimension is how big you need to be to be considered successful. VCs need massive scale, and the bigger you grow the harder it is to maintain momentum, so it's gotta look really juicy at early stage to justify the growth. YC is not a VC, but as the premier incubator that feeds into the SV VC ecosystem they definitely have that lens.
yblu 5y ago
I don't remember where I read this: "Product-market fit is like porn, you know it when you see it"
ttymck 5y ago
Does Uber giving out free rides qualify as "tsunami of demand" or was it artificial demand?
- AnimalMuppet 5y ago
  Well, it shows that there's a lot of demand for free rides. But that isn't actually the business that Uber thinks it's in...

by jawns 5y ago

bingohbangoh 5y ago

There’s also the early days when you’re trying to light tinder with flint lock. You still need to get the fire going.

randomdata 5y ago

The definition of product-market fit indicates that it is about strong market demand, so it would seem that the tsunami of demand is required. That does not mean a successful business requires product-market fit. Weak market demand can still provide a great business and strong market demand is not a guarantee of business success. One can always play the game of semantics, of course.

ghaff 5y ago
It sounds like semantics to me. If I start a company that makes a $100K machine that genuinely increases efficiency/saves money/etc. in some industry used to buying expensive machines, I might reasonably hope to create a successful business. I would less reasonably hope to be able to sit back and watch the tsunami of demand roll in.
- rileymat2 5y ago
  It would also apply to government RFP processes.
- randomdata 5y ago
  And when you have products like that you don't necessarily need strong demand. A small handful of dedicated clients willing to spend incredible amounts of money due to you controlling the supply can create a very successful business. In fact, the article talks about such businesses. Looking to achieve product-market fit is particular to certain businesses (the kind Y Combinator likes to invest in) who are looking to expand to a wide audience, not necessarily something all businesses should be striving for.
  - danielmarkbruce 5y ago
    What you are describing with "small handful of clients willing to spend incredible amounts of money" is very strong product market fit. The market is just small.
    - randomdata 5y ago
      I am not sure I agree. Demand is weak. There are few customers and they buy rarely. It just so happens that there is also very little supply, so the price can be high and in those high prices a very successful business can be built. On the flip side, as a farmer, I have found what is essentially perfect market fit. Nearly every person on earth wants what I produce. The problem for my business is that the supply is also huge, so I can't charge much. Often I lose money. It's a living for me, but not the greatest business or something investors are going to be throwing money at.
      - danielmarkbruce 5y ago
        People buy cars rarely. Ferrari doesn't sell many cars. Ferrari has product market fit. The size of the market and the frequency of purchase are independent of product market fit. Farmers have great product market fit. They sell a commodity and have little/no pricing power and thus earn pretty low returns on capital. Product market fit is one thing. Market size is another. Frequency of purchase is another. Competitive advantage is another. Building a big successful business requires getting many things right, not just getting product market fit. The reason folks at YC (and others) harp on about product market fit is that they seem to see a lot of companies trying to grow before they have it - which is crazy. It doesn't mean product market fit is the only thing.

dasil003 5y ago

Keep in mind Michael Seibel is a co-founder of Twitch. Twitch is on extreme end of the monetization scale where it's success depended entirely on whether they could add free users fast enough to justify sufficient investment to bridge the gap until they could monetize via ads. The other end of the spectrum is enterprise software. In between you have self-service SaaS, premium consumer, and freemium consumer products. Each of these has very different requirements for what traction look like, all of it significantly less a pure ad-driven monetization like Twitch. The other dimension is how big you need to be to be considered successful. VCs need massive scale, and the bigger you grow the harder it is to maintain momentum, so it's gotta look really juicy at early stage to justify the growth. YC is not a VC, but as the premier incubator that feeds into the SV VC ecosystem they definitely have that lens.

yblu 5y ago

I don't remember where I read this: "Product-market fit is like porn, you know it when you see it"

ttymck 5y ago

Does Uber giving out free rides qualify as "tsunami of demand" or was it artificial demand?

AnimalMuppet 5y ago
Well, it shows that there's a lot of demand for free rides. But that isn't actually the business that Uber thinks it's in...