The original context is more nuanced. The quote was responding to "Can you have product market fit without monetization?"
> It depends your product. My definition of product-market fit is: you are drowning in demand—your product is being used by so many customers that you cannot handle all the new people knocking at your door!
> Absent that you do not have product market fit. Most people use the term too loosely.
It's easy to sell a dollar for 90 cents and be "drowning in demand". The answer seems to indicate that demand is a pre-requisite, but not necessarily sufficient.
This is an incredibly important point that often gets overlooked.
Not only are many businesses actually selling a dollar for 90 cents and therefore think they have product-market fit, but even if you aren't one of these, your competitors might be behaving this way.
For example, when doing freelance/consulting work, you can try to match the rates of cheap freelancers, but that's usually not smart- they might be doing the equivalent of selling a dollar for 90 cents.
Always worth remembering that 90% of new businesses die within a year (or something like that). That means there's always a significant amount of competition that is doing things that don't make business sense.
My only problem with this is that it's not really a test at all, because it is not quantifiable.
It's almost like saying, "The true test of product/market fit is whether or not it's obvious you have product/market fit."
Essentially, the statement is redundant.
There are various levels of Product/Market Fit. There's unicorn-level product/market fit and there's amazing product in a small market-level product/market fit (ie. $25M-$100M exit). YC and others in the VC-world only seem to recognize the unicorn-level because that's the only level that's relevant to them.
> "The true test of product/market fit is whether or not it's obvious you have product/market fit."
The thing is, this is the sort of thing people _actually say_ about p/m fit. E.g. Marc Andreessen: "you can always feel product/market fit when it’s happening"[0].
It might feel redundant, tautological and unhelpful, but there are a heck of a lot of startups who are really, really trying to convince themselves they're ready for the next step because "I think we've got product/market fit - I mean, we got that pilot with a big corporate, didn't we?".
Statements like this are a reminder to bring over-optimistic entrepreneurs back down to earth and remind them there's still work to do.
Has anyone here ever been drowned in demand on the Enterprise side? I’ve been in high growth (50+% annual) and it still felt like we were fighting for every sale.
You can have product market fit but if there are competitors, life still is hard.
I wondered the same thing when I saw this. I've been working in enterprise SaaS startups for the last 5-ish years and my experience has been similar. Even when we had solid growth numbers, every single sale is a long fought battle.
I've experienced "drowning in demand" twice in my career. An ecommerce startup and a dating app. It is intense and you know it when it's happening. It's hard to fathom what that would look like in an enterprise software setting. Large deal size, long sales cycles, high touch everything, it just feels like it's geared differently.
That sounds like an attitude aspect, which may have contributed to the growth. Even if you’re drowning in demand, you’re leaving value uncaptured if you don’t aggressively sell.
Slack had about 10 times YOY growth when it first started and then slowed down to about 3-4 times YOY growth which is what it currently looks like it is at.
*these are just my eyeball estimates from looking at graphs in google search for "slack growth"
You need demand and user retention. Just the former is a false sense of success. Many startups flameout without the latter at high frequency. I've witnessed 100s.
Yes! The way I explain it: a sustainable business is one whose customers keep come back because they were satisfied. Until you see that happening, even revenue could be a vanity metric.
(There are exceptions, of course. LASIK surgery, for example. In which case something like NPS can be a better key metric. But generally, repeat business is the best proof that you've got something real.)
Also, uh, money. Coming in. Income. You need this. If you don't have income (or a clear road map to it before you run out of funding) then you don't have a company, you have a Ponzi scheme.
I agree to this. In fact — product/market fit can be measured from the traffic by studying the user experience and frequency of visits. We just launched a product that can do this:
> You mention not having a technical co-founder as a big turn-off. But we all know that unless you’re doing a ‘hard tech’ startup, customer acquisition can often be harder than building a product. Is it not possible to succeed by hiring external tech talent? After all, Kevin Rose famously built Digg with $20/hour Rent-A-Coder talent.
> Kevin Rose famously built Digg with $20/hour Rent-A-Coder talent.
I'm so doing that next time (and on elance, et al., coding "talent" can be had for even less than $20/hr). I spent a year coding my current product (b2b) myself, and now I'm discovering user acquisition is the hardest thing in the universe.
I think the more interesting comment is related to hiring an MBA for a startup.
Having just graduated with one, and meeting Michael at a lunch where he tried to tell us MBAs why we were bad fits for YC, I actually agree.
It’s certainly not a differentiator and while it got me a great job in a very traditional firm, startups need risk takers more than credential seekers (which I’ve come to understand is something I’ve actually become to some extent).
In my mind, a startup is a not a 'business' by any reasonable definition of that word. Steve Blank has the best and probably final take on this: "a startup is an organization formed to search for a repeatable and scalable business model." And so an MBA can probably only deliver negative value insofar as it calibrates you to operate on well-defined problems in fairly predictable, slow-moving environments with ample resources at your disposal.
I am a programmer with an MBA. I honestly forget I have it sometimes. Occasionally someone will remind me I have a master's degree (Why did you leave your master's degree off of this form?) and I have to think for a moment. "What?! Oh, yea..."
So, getting an MBA has had very little impact on my career/life. In fact, considering the time/effort involved, I'd say it has probably given me negative value.
Why do you care what other people tell you’ve become? Just a nice story people try to tell you. Taking risks depends on your life situation. Young graduates going into startups don’t take a risk. A guy who’s made millions going into a new startup is not taking a risk. Best of all: most successful entrepreneurs didn’t ever take a huge risk, but rather go step by step, even if they tell the story differently in hindsight. If you don’t believe that, watch this video https://www.youtube.com/watch?v=t5HZW4NqZ-E
Being a bad fit for a startup
doesn’t mean it’s a bad personal decision. When startups want to stop being startups and start being seen as respected companies, you can bet they start hiring MBAs.
It makes sense for YC to try to filter out credential seekers, because they’re unlikely to have the right motivation. But if your goal is to have a wildly successful career, and MBA is probably a safer bet than a startup. Most startups - even well-funded YC startups - trundle out of the gate, fall over and die.
I've seen startups that couldn't succeed selling dollar bills for fifty cents. There are others, Dropbox for example, that post a video and demand explodes.
I've seen people grind on a startup for years, pivot multiple times, and have nothing to show for it. Then they try another totally different idea and it's an instant success from day one.
"Sometimes we see founders who are not 'all in' but are looking for YC to validate them."
Isn't that a bit irresponsible?
I, for one, had to taper my startup ambitions for a year after graduating university because I had student loans to pay and an initial bank account balance of zero.
Some people are a bit more privileged to have a bit more of a safety net when they start, so jumping off the deep end is a bit easier and less risky.
Many tech companies don't see profit for several years. I don't see how that's possible for some aspiring founders without someone like YC giving them that initial boost.
Despite this "strike," I'm fully self-sufficient now with my own business that is ramen profitable despite having a bit more of a barrier to overcome to start with (which meant biding my time at a Big Company and legally moonlighting by doing remote work with my cofounder while building my business).
Is it not equally impressive that someone started with an empty bank account and worked a full time job for a year and then worked 8+ more hours each day after work to bootstrap their own company?
Please keep this in mind, if at all possible, when deciding whether someone is "fully committed." I hope this makes sense.
I don't think it's a true statement, you have plenty of small to medium-size companies serving niche interests which will be never be drowning in demand but are still profitable. But of course those companies are not exactly the right profile for Y Combinator.
Reminds me of the Segment CEO line at one of the startup school lectures: "finding product market fit is like stepping on a landmine -- you can't miss it".
And yet we must still do "things that don't scale" to build up that demand.
The real challenge is to work out when your product isn't being snapped up by users not because it CAN'T be awesomely useful and demanded and valuable, but because your marketing has not effectively sold it to them yet.
Yeah- the truth is always more nuanced. Both product market fit and doing things that don’t scale are required to get something off of the ground. It’s almost never you see a successful startup that didn’t have both of those pieces.
> Foolish stubbornness comes not from working on the same problem, but from an unwillingness to iterate on the solution. Many founders fall in love with their product rather than the problem they are trying to solve.
So, for example Tesla has a better product-market fit than the competition because it can't produce the Model 3 fast enough? That seems like a rather 1-dimensional view to me...
Look at the differences in product-market fit between Model 3 and its closest equivalent/competitor, the Chevrolet Bolt. Model 3 is obviously a much better fit.
This also explains why so many great companies are built by people solving one of their own problems: imagine how high your demand is for a particular solution, if you are willing to spend 100 hours coding it! That means it is worth at least $1000 for you, for many programmers closer to $10,000.
That is for founders who can personally code their solution. Imagine the situation for founders who can only make a proof of concept prototype and need to raise money for them to see a commercial version.
In this case the desire to see their idea in physical form is so great, they would work unpaid for 1 to 2 years for a 20% chance at seeing it. That means their personal demand is $100,000 for a 20% chance to have 1. (And this is why many engineers work for equity / often called a lottery ticket.)
That is another way to see that the world is drowning in demand for your product/vision :) People will donate hours or market salary to having one.
(I realize that the last three paragraphs are mixed with potential financial reward - however for people coding the solution for themselves, this definitely shows that they themselves are drowning in demand for it.)
Interesting perspective and I can agree somewhat...
But isn't "drowning" correlates to the validation of your product/business model?
Depending on the business that is, but if there's an unsolved need from the market, wouldn't it be that no one is fit for the market? If so, then the person who's "drowning" is the most qualified of all (given at that moment).
What would you do if you worked at a startup which, after a year and a half of existing and raising a substantial Series A _hasnt even started_ to define what the product is? Basically the only reason the startup is alive is a single large customer walked in one day in search of the narrow expertise that we excel at, and gave us a contract. But other than that, there’s zero product effort, and the CEO doesn’t understand he needs to solve customer problems.
How would you estimate the chances of success on something like that. I estimate them at roughly zero in spite of the technological prowess, but maybe I’m wrong.
It depends on what kind of company you want to build.
Yes if your goal is to build a Dropbox, an Instagram etc then you don't have "product-market fit" before you have to stay up all night weeks in a row to keep your service alive.
Background: I have build a VC backed company that ended up on a linear growth curve and enjoyed it a lot, today the company is profitable and proud. Today I am VP Growth of a heavily VC backed company that is trying to hit product-market fit.
Is it always the demand? How will this work for some company which provides a service which is used once in a while by other companies? So for a long time, there would be no demands. Think of something like https://dataturks.com/ . They provide UI tools to manually label data for ML algorithms until some company is doing that specific ML algorithm/task/project.
Demand doesn't need to come from the same people continuously. Car manufacturers have plenty of demand, despite their clients only buying a product every few years.
Similarly, Dataturks can have demand from a stream of different companies, each doing their isolated projects.
[+] [-] sheetjs|8 years ago|reply
> It depends your product. My definition of product-market fit is: you are drowning in demand—your product is being used by so many customers that you cannot handle all the new people knocking at your door!
> Absent that you do not have product market fit. Most people use the term too loosely.
It's easy to sell a dollar for 90 cents and be "drowning in demand". The answer seems to indicate that demand is a pre-requisite, but not necessarily sufficient.
[+] [-] edanm|8 years ago|reply
Not only are many businesses actually selling a dollar for 90 cents and therefore think they have product-market fit, but even if you aren't one of these, your competitors might be behaving this way.
For example, when doing freelance/consulting work, you can try to match the rates of cheap freelancers, but that's usually not smart- they might be doing the equivalent of selling a dollar for 90 cents.
Always worth remembering that 90% of new businesses die within a year (or something like that). That means there's always a significant amount of competition that is doing things that don't make business sense.
[+] [-] pcarolan|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] owens99|8 years ago|reply
It's almost like saying, "The true test of product/market fit is whether or not it's obvious you have product/market fit."
Essentially, the statement is redundant.
There are various levels of Product/Market Fit. There's unicorn-level product/market fit and there's amazing product in a small market-level product/market fit (ie. $25M-$100M exit). YC and others in the VC-world only seem to recognize the unicorn-level because that's the only level that's relevant to them.
[+] [-] boffinism|8 years ago|reply
The thing is, this is the sort of thing people _actually say_ about p/m fit. E.g. Marc Andreessen: "you can always feel product/market fit when it’s happening"[0].
It might feel redundant, tautological and unhelpful, but there are a heck of a lot of startups who are really, really trying to convince themselves they're ready for the next step because "I think we've got product/market fit - I mean, we got that pilot with a big corporate, didn't we?".
Statements like this are a reminder to bring over-optimistic entrepreneurs back down to earth and remind them there's still work to do.
[0] https://a16z.com/2017/02/18/12-things-about-product-market-f...
[+] [-] mathattack|8 years ago|reply
You can have product market fit but if there are competitors, life still is hard.
[+] [-] powvans|8 years ago|reply
I've experienced "drowning in demand" twice in my career. An ecommerce startup and a dating app. It is intense and you know it when it's happening. It's hard to fathom what that would look like in an enterprise software setting. Large deal size, long sales cycles, high touch everything, it just feels like it's geared differently.
[+] [-] beager|8 years ago|reply
[+] [-] mrep|8 years ago|reply
*these are just my eyeball estimates from looking at graphs in google search for "slack growth"
[+] [-] paraschopra|8 years ago|reply
[+] [-] canvasduck|8 years ago|reply
[+] [-] paulsutter|8 years ago|reply
[+] [-] suhail|8 years ago|reply
[+] [-] wpietri|8 years ago|reply
(There are exceptions, of course. LASIK surgery, for example. In which case something like NPS can be a better key metric. But generally, repeat business is the best proof that you've got something real.)
[+] [-] taneq|8 years ago|reply
[+] [-] RA_Fisher|8 years ago|reply
[+] [-] volument|8 years ago|reply
https://volument.com/product-market-fit
[+] [-] derrida|8 years ago|reply
How is Digg?
[+] [-] jcadam|8 years ago|reply
I'm so doing that next time (and on elance, et al., coding "talent" can be had for even less than $20/hr). I spent a year coding my current product (b2b) myself, and now I'm discovering user acquisition is the hardest thing in the universe.
[+] [-] mjlee|8 years ago|reply
[+] [-] bkohlmann|8 years ago|reply
Having just graduated with one, and meeting Michael at a lunch where he tried to tell us MBAs why we were bad fits for YC, I actually agree.
It’s certainly not a differentiator and while it got me a great job in a very traditional firm, startups need risk takers more than credential seekers (which I’ve come to understand is something I’ve actually become to some extent).
[+] [-] sp527|8 years ago|reply
[+] [-] jcadam|8 years ago|reply
So, getting an MBA has had very little impact on my career/life. In fact, considering the time/effort involved, I'd say it has probably given me negative value.
[+] [-] baxtr|8 years ago|reply
[+] [-] irq11|8 years ago|reply
It makes sense for YC to try to filter out credential seekers, because they’re unlikely to have the right motivation. But if your goal is to have a wildly successful career, and MBA is probably a safer bet than a startup. Most startups - even well-funded YC startups - trundle out of the gate, fall over and die.
[+] [-] rmason|8 years ago|reply
I've seen people grind on a startup for years, pivot multiple times, and have nothing to show for it. Then they try another totally different idea and it's an instant success from day one.
[+] [-] tritium|8 years ago|reply
[+] [-] Hydraulix989|8 years ago|reply
Isn't that a bit irresponsible?
I, for one, had to taper my startup ambitions for a year after graduating university because I had student loans to pay and an initial bank account balance of zero.
Some people are a bit more privileged to have a bit more of a safety net when they start, so jumping off the deep end is a bit easier and less risky.
Many tech companies don't see profit for several years. I don't see how that's possible for some aspiring founders without someone like YC giving them that initial boost.
Despite this "strike," I'm fully self-sufficient now with my own business that is ramen profitable despite having a bit more of a barrier to overcome to start with (which meant biding my time at a Big Company and legally moonlighting by doing remote work with my cofounder while building my business).
Is it not equally impressive that someone started with an empty bank account and worked a full time job for a year and then worked 8+ more hours each day after work to bootstrap their own company?
Please keep this in mind, if at all possible, when deciding whether someone is "fully committed." I hope this makes sense.
[+] [-] realusername|8 years ago|reply
[+] [-] icebraining|8 years ago|reply
[+] [-] amasad|8 years ago|reply
[+] [-] hoodoof|8 years ago|reply
The real challenge is to work out when your product isn't being snapped up by users not because it CAN'T be awesomely useful and demanded and valuable, but because your marketing has not effectively sold it to them yet.
[+] [-] sskates|8 years ago|reply
[+] [-] icc97|8 years ago|reply
> Foolish stubbornness comes not from working on the same problem, but from an unwillingness to iterate on the solution. Many founders fall in love with their product rather than the problem they are trying to solve.
[+] [-] lazyjones|8 years ago|reply
[+] [-] kozak|8 years ago|reply
[+] [-] crocal|8 years ago|reply
[+] [-] icefox|8 years ago|reply
[+] [-] logicallee|8 years ago|reply
That is for founders who can personally code their solution. Imagine the situation for founders who can only make a proof of concept prototype and need to raise money for them to see a commercial version.
In this case the desire to see their idea in physical form is so great, they would work unpaid for 1 to 2 years for a 20% chance at seeing it. That means their personal demand is $100,000 for a 20% chance to have 1. (And this is why many engineers work for equity / often called a lottery ticket.)
That is another way to see that the world is drowning in demand for your product/vision :) People will donate hours or market salary to having one.
(I realize that the last three paragraphs are mixed with potential financial reward - however for people coding the solution for themselves, this definitely shows that they themselves are drowning in demand for it.)
[+] [-] gregoriol|8 years ago|reply
[+] [-] McPepper|8 years ago|reply
Depending on the business that is, but if there's an unsolved need from the market, wouldn't it be that no one is fit for the market? If so, then the person who's "drowning" is the most qualified of all (given at that moment).
[+] [-] throwaway84742|8 years ago|reply
How would you estimate the chances of success on something like that. I estimate them at roughly zero in spite of the technological prowess, but maybe I’m wrong.
[+] [-] stephenson|8 years ago|reply
Yes if your goal is to build a Dropbox, an Instagram etc then you don't have "product-market fit" before you have to stay up all night weeks in a row to keep your service alive.
But sometimes it makes more sense (and joy) enjoy building stuff where the product-market fit and growth curve is a lot slower, read Basecamp's post about linear growth companies: https://m.signalvnoise.com/the-world-needs-more-modest-linea...
Background: I have build a VC backed company that ended up on a linear growth curve and enjoyed it a lot, today the company is profitable and proud. Today I am VP Growth of a heavily VC backed company that is trying to hit product-market fit.
[+] [-] gajju3588|8 years ago|reply
[+] [-] icebraining|8 years ago|reply
Similarly, Dataturks can have demand from a stream of different companies, each doing their isolated projects.