Knowing Product Market Fit in the Moment

By Nina Lamia

Product market fit is an extremely useful concept for managers and entrepreneurs. A successful entrepreneur knows how to turn this “concept” into a “reality” by knowing in the moment that his or her company has achieved product market fit.

In the RentJuice case, the opening question (one that I was called upon to answer!), was “Has the company achieved product market fit”? I had prepared the case and had thought deeply about this question while reading, but I still wasn’t sure if they had or not. Some signs pointed to YES (e.g. RentJuice had conducted many customer interviews and had incorporated their feedback into the product, customers who took a RentJuice demo converted at a high rate) but others pointed to NO (e.g. from May to October 2009, only nine brokerage firms signed up, sales cycles seemed long). I answered that yes RentJuice had achieved product market fit, and I defended my response with data from the case. However, I still wasn’t completely convinced. And surprisingly, my amazing, intelligent, talented classmates didn’t have the answer either – the class was split almost 50/50 in its response. If we couldn’t figure out if RentJuice had achieved product market fit from reading a case that had all the details laid out neatly in front of us, how will we know – in the moment - when we start our own ventures?

I’ve thought about this question a lot since the RentJuice class and have concluded that just as every entrepreneur is unique, so is the process by which an entrepreneur knows if he or she has achieved product market fit. Some entrepreneurs will gauge product market fit using mostly qualitative factors such as customer and market feedback. Others may rely on more quantitative factors such as acquisition cost, average sales cycle, and retention. Obviously, the majority of entrepreneurs will gauge product market fit using a combination of qualitative and quantitative factors; however, depending on the industry, business model, and entrepreneur’s vision and style, the weight placed on qualitative versus quantitative measures may vary significantly.

Additionally, I think it’s really important for product market fit to always be top of mind for entrepreneurs. One of the biggest issues I see with identifying product market fit is knowing when your product “fits enough” for the market. There can always be a “better fit”, but knowing when the fit is good enough to begin to scale is essential. Any good company will continue to enhance its product while it’s scaling, but knowing that the product fits the market enough to begin scaling is key.

It’s also important to parse out how the product features versus the business operational elements (e.g. selling tactics) affect the quantitative metrics for assessing product market fit. We saw long sales cycles and low conversion in RentJuice, but this was more a function of the sales organization and tactics than it was of the product and platform features. 

It’s easy to read about product market fit and understand it in theory, but it’s much more difficult to assess whether or not you have it – This rang true for me in the RentJuice case and is likely to continue to ring true as I pursue my own ventures! Being aware of the difficulties and common issues with identifying it is an important first step!



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