The Product Market Fit Flow Chart (or PMFFC for short)

July 13th, 2015 Comments Off

The goal of every startup, or any company producing a product that has some kind of ‘customer’, early on should be to find that magical ‘product market fit’ (herein PMF because I’m lazy). According to Wikipedia:

Marc Andreessen was the first person that used the term: “Product/market fit means being in a good market with a product that can satisfy that market.”

I was recently being recruited by a company, but turned them down because of what I saw was a big business mistake. They had PMF, but they weren’t doing anything with it.

Allow me to introduce what I believe should be on a laminated pamphlet and given to every entrepreneur in the valley:

PMF

The bit that was missing in the company I was talking to was the Run With It stage. By that I mean make your customers happy and as quickly as possible get as many as possible! This particular founder told me about the customers he already had, and about his 8-9 month roadmap to hire engineers and build product. I asked how many sales and support people he would hire in that time, he said zero.

By the roadmap he was suggesting in 2016 they would be taking in maybe ~$10k monthly, have an engineering team of ~10, a sales team of 1 (the founder) and an annual burn of >$1MM. An alternative reality, would be by 2016 to have an engineering team of 5, a sales and support team of 3-5, taking in $100K monthly and be on the verge of break even and able to raise a kickass series A.

I’m a technical person by training, and 5 years ago I’d probably be making the same mistake as this founder.  It’s really unnatural to think about sales, and it’s easy to think of them as unskilled workers you can pickup by the dozen at a moments notice.  In reality, this couldn’t be further from the truth.  Sales is hard, very hard, and you need to be working on it as early as possible.  I consider it one of the most important lessons I’ve learned as an entrepreneur to never undervalue or under-prioritize your sales and distribution strategy.  Once you’ve achieved PMF, or are even within long distance sonar range scanners of PMF, you should be thinking really hard about how to sell the bananas out of what you’re building.