The Magic Behind Product-Market Fit

Many founders, especially those navigating the startup journey for the first time, ask me about Product-Market Fit (PMF). It’s a hot topic, and rightly so. Achieving PMF is not magic, however. It’s hard, iterative work. It’s humbling. It has to involve “talking to 100 potential customers” according to a former CIO of Intel, whose words I took to heart. I have tried to follow her advice since, although I have reduced the number to a more manageable 40. And yes, it takes time. Let me break it down from both customer and market perspectives, and share a few lessons from my own journey.

What Is Product-Market Fit?

At its core, PMF means your product solves a real problem for a specific group of customers, and they’re willing to pay for it. Better yet, they come back, they tell others, and usage grows without you pushing every deal over the finish line yourself. As you can guess, PMF is also not a stage, but a range - early PMF and mature PMF. It is also not a static stage as things change. Market needs, technology advancements, etc.

Signals of PMF

Let’s break it down into some observable signals, but keep in mind it is not an “all or nothing” but rather a gray scale. A few of these signals could mean you are moving in the right direction, while many signals may mean you are entering mature PMF. The hardest part is for founders to separate false early signals from real signals steering them right.

Customer & GTM (Go-to-Market) Signals

• Inbound leads outside your network
  When prospects who aren’t in your LinkedIn or coffee circle start reaching out, that’s a strong indicator. It means your reputation (social media, press, web presence, marketing, events, analysts…) or your customers’ enthusiasm (private or public conversations) are driving awareness.

• Flywheel momentum
  Customers are not only satisfied, they’re referenceable. They offer to talk to other prospects, analysts, provide honest, positive quotes for your marketing etc. They share their success stories publicly. If anything is magic, this is the magic you have earned!

• Churn is low
  When customers stay with your product and grow their usage, and do not churn, this is a strong sign of a healthy PMF.

  Note: In a startup journey, however, it’s common to pivot a few times as you continue to explore and understand what you really need to build. Usually between Seed and Series A, or before Seed - but even later stage if the market suddenly changes. As an example, if you evolve from PLG/developer-focused to enterprise/sales-led, early users might churn. You're evolving toward a new PMF and will hence lose some early adopters on the way. My tip here is to always anchor your metrics to your current Ideal Customer Profile (ICP). In other words, if your current ICP is churning, you have some issues of PMF to dig into.

• Early signs of repeatability
  The first big deal is a grind. The second is still hard, but somewhat familiar. By the third, you’ve (hopefully) improved and learned a lot. And, again hopefully, shaved off some of the unknowns and can handle curve balls better. That’s progress. You’re building towards a repeatable sales motion, even if not yet smooth. That counts - especially if the buying reason seems to be in the same category or ball park.
  

Tip: Don’t confuse effort with lack of fit. Even at PMF, enterprise sales are hard. Expect resistance. If it’s too easy, you might not be solving a big enough pain to make it sticky over time…

Market Signals

• Win rate of competitive deals
  Other players are going after the same budgets—and you're winning some. Not all. That’s normal. Relationships, features, and timing all play a role. But your win rate in competitive deals is measurable, and should be growing or at least be satisfactory.

• Validated market
  If there's room for multiple players (top 5 to 10, depending on your market segment), you're in a good-size pond. That there is competition is a good sign of market validation. If there is none, you may be too early for that market and miss the important timing plus urgency equation. Hence, that there is competition isn't bad, it keeps you sharp!

Usage & Value Delivery

• Growing and repeat usage
  Post-deployment, your customers keep logging in. They use the product because they need it, not just because it is a new thing after they bought it.

• Clear articulation of value
  When customers can explain back to you, in their own terms, what value they’re getting out of the tool - and what real business impact it has provided them, you can give yourself a little pat on the back. If they can’t, however, you may have sold them “the wrong thing”, i.e. risking not meeting their expectations and risk future churn (of ICP). This is a warning sign to dig into so you are not missing the PMF mark - maybe things have changed? Better safe than sorry and start digging more.

Food for Thought

Many new founders mistakenly think slow sales cycles - especially in enterprise - mean they don’t have PMF. That’s not true.

PMF means people are willing to pay to solve the pain you address. Long sales cycles just mean you're selling into a complex customer type or market. If you want speed, debug your sales conversion rates - what is stalling? What is taking too long? Has something changed? Is there a bottleneck? Do yiou need to change your ICP, messaging? But if customers still close, just slow, do not change your conviction. Instead, help find accelerators to the process!

Similarly, don’t panic when more competitors show up. That’s validation of the market. You just have to stay more agile and more innovative and make the right bets forward. And by all means, focus on real business impact! That wins in the long run anyway.

PMF is Dynamic

Here’s the truth most don’t talk about: PMF shifts over time.

• Technology evolves: New players enter with cleaner slates, fewer legacy burdens, and slicker interfaces.

• Market winds change: Examples like ChatGPT changed every buyer’s attention towards AI/chat capabilities. That shift made it harder for great non-AI products to close deals, even if they were solving real pain.

You must continuously monitor, reassess, and adapt your PMF. Observe the signals listed above, among others indicators. Stay on top of if your ICP is changing their language, budget focus, or interests. PMF is not a one-time achievement, it's a living, evolving state.

“Keep Ice in your Tummy”

As a founder, you’ll face noise, slow closes, distracted buyers, shiny competitors, reorgs, macro economy shifts, pulled budgets, champion departures etc. That’s why you need what I call “ice in your tummy” (common Swedish expression), in short meaning resilience, focus, and keeping the cool. Especially when things get messy. If your vision and timing is right, and your team is able and unlocked to execute, things will start to move. I’ve seen it. It is like a train starting.. A lot of steam, and noise and hard work, but after getting some speed it starts to go faster and faster. Just need to be very good at building the rails while the train is running full speed! That is startup for you. 🙂

For the Road

Here are some underappreciated insights only experienced founders usually learn the hard way:

• PMF ≠ Virality
  Not all great products go viral. Some of the most enduring businesses are quiet, focused, and sell into unsexy, but critical, markets.

• Customer love Is the strongest indicator
  If users defend your product when procurement challenges the renewal, you’re golden.

• PMF can be market-contextual
  You might be PMF-ready in healthcare, but not fintech. Or in Europe, but not the U.S. Market context matters.

Don’t chase PMF as a mythical milestone or expect it to magically happen. Build relationships. Deliver real value. Solve a deep, painful problem (often hard to sell into or deploy = it takes time). Above all, make your early users love working with your team. And deliver - over time - what your customers need. That’s what turns startups into businesses, and products into movements.