[English Version, 中文版請往下滑]
Product-Market Fit (PMF) is a crucial milestone for startups. It can be broken down into 3 stages: “1. Acquiring users,” “2. Acquiring paying customers with positive unit economics,” and “3. Continuously accumulating customers with positive unit economics.”
PMF is not just a challenge that startups encounter in their early stages and then no longer need to worry about. As the market evolves, teams may need to adjust their strategies and re-achieve PMF. To run a successful and sustainable business, entrepreneurs need to constantly monitor the status of their product’s PMF.
This article mainly references a tweet by Lenny Rachitsky (the ex-Airbnb Product Lead, angel investor, and author of Lenny’s Newsletter, the highest-paid business category newsletter on Substack). In this article, I broke down PMF into 3 stages and incorporated my experience and relevant information to provide several indicators for reference.
Stage #1: Identifying User Pain Points and Obtaining Early Users
Startups can conduct interviews and product experiments to identify customer needs, pain points, and whether customers understand product values through interviews and product experiments, concluding if they have achieved the first stage of PMF. Neeraj of Battery Venture believes that it is crucial to find and address the top one or two pain points of the target audience, as very few customers will address the third priority pain point.
For example, in the case of a B2B SaaS company:
(1) If the product is not officially launched yet, the team can measure whether there are strong PMF signals by using surveys and interviews:
- Are there customers who, after hearing your product concept, get excited and want to try it out?
- Are there customers who are willing to pay for the product?
(2) If the product is already launched, indicators to assess strong PMF signals include:
- For SaaS companies targeting small to medium-sized users (monthly charges of around USD $100 or less), observe if website traffic is growing steadily on a month-over-month basis and if there is a registration rate of 3–5% or higher among website visitors.
- For SaaS companies targeting large users, observe whether the number of high-quality inbound leads is continuously increasing and if leads can be obtained through outbound calls and emails.
Stage #2: Acquiring Paying Customers with Positive Unit Economics
The second stage of PMF is whether users are willing to pay for the product and whether the business can achieve positive unit economics.
Unit Economics is an analysis dimension that breaks down business performance (revenue, costs, and expenses related to revenue) into specific “units,” such as per user or per order. Refer to the past article “Cultivating the Ability to See the Truth: Unit Economic Analysis” by Cornerstone Ventures for detailed information.
Positive Unit Economics means generating more revenue per transaction than costs, resulting in a profitable business.
The following are 3 dimensions of Unit Economics analysis:
- Gross Margin: (Revenue — Cost of Goods Sold) / Revenue, which considers the direct cost involved in generating revenue. For SaaS companies, common COGS includes cloud hosting costs, customer service team costs (e.g., costs for customer retention, DevOps team responsible for normal operation in Production). See “SaaS Capital: What Should be Included in COGS for My SaaS Business? (2023 Update)” for details.
When designing pricing, entrepreneurs need to consider how to design a pricing model that can achieve positive unit economics for different tiers of users. For example, if your startup offers hosting services, consider the average usage amount of top users and their impact on cloud hosting costs to determine whether volume-based charging can replace a fixed monthly fee system for users.
- Contribution Margin: (Revenue — Variable Costs) / Revenue, which helps us analyze the profitability of the product. We often consider the contribution margin after the deduction of marketing expenses to assess whether the team is achieving unit sales profitability while offering subsidies or advertising.
If the team can gradually establish brand awareness and loyalty and obtain a higher proportion of organic traffic in customer acquisition, they can obtain more orders, gradually optimize the contribution margin, and eventually turn it into positive.
- Profit Margin: (Revenue — Operating Costs — Operating Expenses) / Revenue. This considers the direct expenses of R&D, G&A and S&M.
As VCs expect to cooperate with companies willing to sacrifice short-term profits to invest operating profits and external funding in revenue growth, positive profit margins can be set as a long-term PMF milestone for such startups.
Stage #3: Continuously Accumulating Customers with Positive Unit Economics
The third stage of PMF is to achieve stable growth efficiency and high user retention rates under positive unit economics, ultimately reaching a positive profit margin. Common indicators for measurement include:
- LTV/CAC: The ratio of Lifetime Value (LTV) to Customer Acquisition Cost (CAC). In the eyes of VCs, a good LTV/CAC ratio should be maintained at 3x or higher.
- Retention Rate: Good retention rates vary for different business models. Lenny’s Newsletter provides benchmark retention rates for different business models as “good” or “great” in the article “What is good retention?”
All in all, this article provides a simple analysis of the three important stages to achieve PMF. As the market dynamics change (e.g., when user preferences change or stakeholders in the industry value chain make product or operational changes), the team’s PMF stage may advance or regress accordingly. We recommend entrepreneurs continuously adjust and improve their strategies to better operate a scalable and sustainable business in response to dynamic market changes.
Recommended readings:
The article was originally published on Cornerstone Ventures’ Blog: 淺談 Product-Market Fit 的 3 個階段.
I am Catherine. After graduating from National Taiwan University with a major in International Business, I joined a startup and worked as a product manager, building products from zero to one. I look forward to incorporating my startup & VC experiences to help startups grow, iterate and bring values to the world.
[中文版]
淺談 Product-Market Fit 的 3 個階段
Product-Market Fit (PMF) 是新創在營運上，需要不斷達成的里程碑。PMF 能簡單被拆分為 3 個階段：「1. 取得用戶」、「2. 在正 Unit Economics 下，取得付費用戶」、「3. 在正 Unit Economics 下，持續有效地累積用戶」。
PMF 不會僅是新創在初創時會遇到的挑戰，一旦克服後就不再需要關注。隨著市場的變化，團隊可能需要調整策略，重新達成 PMF。創業者若想經營一個具規模且能長期持續運營的生意，即需時時檢視產品的 PMF 狀態。
本篇主要參考 Lenny Rachitsky (ex-Airbnb Product Lead，亦是天使投資人、Substack 商業類別付費訂閱人數最高的電子報 Lenny’s Newsletter 的撰寫者) Twitter 上分享的關於 Product-Market Fit 的推文，並綜合筆者的經驗和其他相關資料分拆 PMF 為 3 個階段，並提供可參考的指標。
階段#1: 挖到用戶痛點，並獲取到早期用戶
新創能透過訪談與產品實驗去快速找到客戶需求、痛點，以及客戶是否了解產品價值，來理解自己是否有達到 PMF 的第一個階段。Battery Venture 的 Neeraj 認為，找到並著手處理目標客群前一、二痛的痛點很重要，據他的經驗，很少客戶會著手處理優先級排序第三名的痛點。
以 B2B SaaS 公司為例：
(1) 若產品還未正式上線，團隊可以透過問卷、訪談去衡量推出的產品是否有強 PMF 的訊號：
- 是否已有客戶聽完你的產品概念後，立刻感到興奮，並想試用？
- 是否已有客戶已經願意付費採用？
(2) 若產品已上線，則可以觀察以下指標，判斷產品是否有強 PMF 的訊號：
- 對於鎖定中小型用戶客群的 SaaS 公司 (每月收費約 USD $100 以下)，可以觀察自家網站流量是否以穩定的 MoM 速度成長？網站的訪客中，是否有 3–5% 以上的註冊率？
- 對於鎖定中大型用戶客群的 SaaS 公司，可以觀察高品質的 inbound leads 數量是否有持續在增加，並能透過 outbound calls 和 emails 取得 leads？
階段#2: 能向用戶收費，並取得正 Unit Economics
PMF 的第二階段為是否開始有用戶願意為了產品和服務買單，而創業題目是否能取得正 Unit Economics。
Unit Economics 是將業務表現 (營收、與營收連動之成本與費用等) 以特定的「單位」來拆解的分析維度，常見的做法如 per user、per order 等，詳細能參考參考基石過去的文章：培養看透真相的能力：單位經濟分析一文。
正的 Unit Economics 意指以每交易單位所產生的收入大於成本，使企業達到獲利。
以下提供 3 種 Unit Economics 的分析維度：
- 毛利率 (Gross Margin)：(營收 — 營業成本) / 營收 ，這個指標考量了創造營收所涉及的直接費用。對於 SaaS 公司來說，常見的 COGS 包含了：雲端託管成本、客戶與服務維運成本 (如：花費在客戶留存的費用、負責正式環境正常運轉的 DevOps 團隊的費用等)，詳見 SaaS Capital” What Should be Included in COGS for My SaaS Business? (2023 Update)。
在設計收費金額時，創業者需考量如何為不同 tier 的用戶設計能取得正 Unit Economics 的收費模式。舉例而言，若你的新創做的是託管服務，則要考量頭部用戶的平均用量大小與其對雲端託管成本的影響，並以此來考量是否可以用量取代固定月費制度向使用者收費。
- 邊際利潤率 (Contribution Margin)：(營收 — 變動成本) / 營收，可以幫助我們分析產品的盈利能力。我們常會考量計入行銷費用下的邊際利潤率，以了解團隊在做補貼、打廣告的情況下，單位銷售的利潤。
若團隊在經營過程中能逐漸建立起品牌知名度與忠誠度，並能在獲取客戶的方面取得越來越高比例的有機流量，則能在行銷費用維持穩定支出的情況下，取得更多訂單，邊際利潤率並能逐漸優化、最終轉正。
- 淨利率 (Profit Margin)：(營收 — 營業成本 — 營業費用) / 營收，考量了營業的直接成本與產銷人發財費用。
由於 VC 期望合作的對象，會是願意犧牲短期幾年的利潤，將營業邊際利潤與向外取得的資金投注於營收成長的新創。因此對於這樣的新創，可以將正的淨利率設定為較遠期的 PMF 里程碑。
階段#3: 能在正 Unit Economics 下，持續有效地累積客戶
PMF 的第三階段為取得穩定的成長效率與高用戶留存率，並最終達成正的淨利率。常見的衡量指標如下：
- LTV/CAC：Life time value (LTV) 與 Customer Acquisition Cost (CAC) 的比例。VC 眼中好的 LTV/CAC 比例需維持 3x 以上。
- 留存率：對於不同的商業模式，好的留存率會不同。具 Lenny’s Newsletter: What is good retention 一文，可見以下商業模式的 Good 與 Great 留存率 benchmark：
以上簡單提供達成 PMF 的 3 個重要階段的分析。隨市場變化動態調整 (如：當用戶偏好有改變、或是產業價值鏈中的 stakeholder 做出產品或營運上的變動)，團隊的 PMF 階段也可能因此前進或後退。建議創業者面對動態的市場變化，能持續不斷調整和改進，以更好地營運一間可規模化且能長久經營的企業。
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原文載於基石創投：淺談 Product-Market Fit 的 3 個階段
我是 Catherine，畢業於台大國企系。曾加入新創公司工作，擔任產品經理，從 0 到 1 打造產品，之後加入基石創投至今。希望能與優秀的創業團隊一起合作。
