
A Quantitative Approach to Product Market Fit - smalter
https://tribecap.co/a-quantitative-approach-to-product-market-fit/
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pixelmonkey
This seems more like a companion article to David Skok’s SaaS Metrics 2.0:

[https://www.forentrepreneurs.com/saas-
metrics-2/](https://www.forentrepreneurs.com/saas-metrics-2/)

I found it to be more about SaaS metrics and less about product/market fit.

For example, you could have great product/market fit with poor pricing, in
which case you might have awful SaaS metrics and sluggish revenue growth while
having great usage metrics and rapid organic/viral user growth.

For example, imagine if PagerDuty or Slack were free for enterprises: they’d
have terrible SaaS metrics but wonderful product/market fit, IMO.

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danieltillett
If you give something away for free do you really have product/market fit? If
you continue this sort of thinking by giving every user $100 you can make
every product a huge success with massive viral growth.

Sustainable product/market fit is rare, the fake kind can be easily bought by
selling a dollar for 50c.

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jeremyjh
Isn't this what Uber and Lyft have done? They've been selling dollars for $.75
and still have not proven they have a market at sustainable pricing as far as
I know. Meanwhile they have a market cap greater than the big three US auto
makers combined.

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danieltillett
That is certainly the suspicion. In the end, like gravity, reality always
wins.

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mxstbr
Interesting, but seems pretty complex. I prefer the model employed by
Superhuman: [https://firstround.com/review/how-superhuman-built-an-
engine...](https://firstround.com/review/how-superhuman-built-an-engine-to-
find-product-market-fit/)

Yeah I know, they're the joke of last week, but that methodology is pretty
simple (just ask four questions) and (importantly) is trackable over time,
while working for businesses of all kinds.

Is anybody else using that at the moment? How has it worked out?

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wpietri
I like that approach. To me the essential question of product-market fit is
whether you are delivering sufficient value to your users. But I think
"sufficient" has at least three characteristics that one can measure.

One is whether the user likes it enough to keep using it. I think that's well
captured by the "how disappointed" approach (and actual usage stats). Another
is whether they'll be evangelical about it, and I think that's measurable with
Net Promoter Score (and actual viral behavior). And a third is whether you can
build a sustainable business, which early on can be pretty simple, but
eventually requires a fairly complex numerical analysis.

I think a numerical approach like this one is especially valuable if the
business isn't self-funding. Because a) you need to be able to prove the value
of the equity you're selling, and b) if you don't price your equity properly,
it's just a gift to the VCs who do that work.

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Rafuino
Interesting, but this seems more suited for subscription-type software
businesses, not anything related to products with longer periods between
repeat purchases. You'd have to wait for a couple of years or more to build
out churn/resurrection/expansion, etc. and cohort data for a hardware or
durable goods business. No wonder VCs don't really like to fund
hardware/infrastructure businesses

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mushufasa
metrics are helpful, but creation is art

