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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

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.
    - randomdata 5y ago
      > People buy cars rarely. Ferrari doesn't sell many cars. Ferrari has product market fit. Not by the formal definition of having strong demand. The demand for Ferraris is weak, but the equally restricted supply allows Ferrari profitability anyway. The demand for food is exceptionally strong, but the vast supply makes profitability very difficult. > Product market fit is one thing. Market size is another. Frequency of purchase is another. Competitive advantage is another. They are separate things, but all come together to make up what we call demand. Product market fit hinges on demand, not those variables alone.
      - danielmarkbruce 5y ago
        I'm not sure what "formal definition of demand" you referring to. In microeconomics demand is modeled as a curve and the statement "demand is weak" doesn't mean anything. Other than that, the word "demand" is used very informally. The microeconomics definition would state that the "quantity demanded" at price X is Y. Again, "weak" doesn't mean anything in that field. Nope, they don't all come together to make up "demand", and there is no "we" because your definition isn't what's used by the business or economics community. Those things come together to decide the size and profitability of a business. Demand is just one part. Competitive positioning is almost strictly a supply side issue. For example, there is more demand for corn than there is for coca cola, yet Coke makes a fortune and corn farmers do not. Coke has built a brand and large distribution channels - both which have large fixed cost components and hence require enormous scale. The result is a small number of soda suppliers and only 2 cola suppliers in most markets. Supply side issue.
        randomdata 5y ago
        > I'm not sure what "formal definition of demand" you referring to. Me neither since I didn't. > In microeconomics... I can find no evidence that product-market fit came out of microeconomics, so I am not entirely clear on the relevance of that. Context is relevant. This seems like us having a conversation about how a pointer on a computer (you know, the arrow thing) interacts with a UI with someone chiming in to say, "In computer science a pointer stores a location in memory." > Again, "weak" doesn't mean anything in that field. I'm inclined to agree within the new context you have provided, but that does not mean "weak demand" is without meaning. In fact, it is a term used relatively frequently, including in respected publications.

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.
  - randomdata 5y ago
    > People buy cars rarely. Ferrari doesn't sell many cars. Ferrari has product market fit. Not by the formal definition of having strong demand. The demand for Ferraris is weak, but the equally restricted supply allows Ferrari profitability anyway. The demand for food is exceptionally strong, but the vast supply makes profitability very difficult. > Product market fit is one thing. Market size is another. Frequency of purchase is another. Competitive advantage is another. They are separate things, but all come together to make up what we call demand. Product market fit hinges on demand, not those variables alone.
    - danielmarkbruce 5y ago
      I'm not sure what "formal definition of demand" you referring to. In microeconomics demand is modeled as a curve and the statement "demand is weak" doesn't mean anything. Other than that, the word "demand" is used very informally. The microeconomics definition would state that the "quantity demanded" at price X is Y. Again, "weak" doesn't mean anything in that field. Nope, they don't all come together to make up "demand", and there is no "we" because your definition isn't what's used by the business or economics community. Those things come together to decide the size and profitability of a business. Demand is just one part. Competitive positioning is almost strictly a supply side issue. For example, there is more demand for corn than there is for coca cola, yet Coke makes a fortune and corn farmers do not. Coke has built a brand and large distribution channels - both which have large fixed cost components and hence require enormous scale. The result is a small number of soda suppliers and only 2 cola suppliers in most markets. Supply side issue.
      - randomdata 5y ago
        > I'm not sure what "formal definition of demand" you referring to. Me neither since I didn't. > In microeconomics... I can find no evidence that product-market fit came out of microeconomics, so I am not entirely clear on the relevance of that. Context is relevant. This seems like us having a conversation about how a pointer on a computer (you know, the arrow thing) interacts with a UI with someone chiming in to say, "In computer science a pointer stores a location in memory." > Again, "weak" doesn't mean anything in that field. I'm inclined to agree within the new context you have provided, but that does not mean "weak demand" is without meaning. In fact, it is a term used relatively frequently, including in respected publications.