# The PMF Cheatsheet (print-friendly) Source: https://open.substack.com/pub/rahulrumalla/p/the-pmf-cheatsheet-print-friendly?r=1ccqo Kiwi News: https://news.kiwistand.com/stories/The-PMF-Cheatsheet-print-friendly?index=0x67ae4d17acd937cddd783010d7164915754dc358994a65f0b9e42c8b44fe25ca9fa3360b Submitted by rsquare.eth on 2025-02-13 UTC, 4 upvotes, 1 comment ## Summary Product-market fit is presented as the moment a product truly resonates with its target audience, shown by users returning, recommending it, and being unable to imagine life without it. The article lists indicators such as flat retention curves, net promoter scores above 30 (50+ is better), and a rule that 40% or more of users would be very disappointed without the product. It also says LTV should exceed CAC, and that PMF is not permanent, since it can shift as a company grows or pivots. ## Article Product-Market Fit (PMF) is that magical moment when your product truly resonates with your target audience — it’s like discovering your favorite ice cream flavor. You know you’ve nailed it when people keep coming back for more, tell their friends about it, and basically say, “I can’t imagine life without this!”. 🖨️ This is also written in a way you can print it as a cheatsheet 🖨️ It’s the “I get it, I love it, I need it!” moment that transforms startups from a hopeful experiment into a must-have solution for customers. In a world where AI’s influence is accelerating, this insight also seems synonymous with OpenAI’s research — “While AI models will continue to improve, the real ‘moat’ around your product lies in your ability to listen to users and iterate quickly. Don’t just build the best product; build the product that resonates most with your users”.1 Here are some quotes on PMF from some of the legendary people I follow, that helped me personally to form a perspective on it over time. “When you have product-market fit, it’s obvious—users are pulling the product out of your hands.” — Paul Graham (Y Combinator) “Product-market fit means being in a good market with a product that can satisfy that market… it’s the only thing that matters.” — Marc Andreessen (Andreessen Horowitz) “If you don’t know who your customer is, you don’t know what your product is.” — Naval Ravikant (AngelList) “Retention is the ultimate indicator of product-market fit. If people don’t stick around, you don’t have it.” — Brian Balfour (Reforge)2 “Focus on a small set of users that really love what you’re making, then expand from there.” — Sam Altman (OpenAI) “If 40% of your surveyed users would be very disappointed if they couldn’t use your product, you’re close to product-market fit.” — Sean Ellis (Growth Hacker, Entrepreneur) In essence, once PMF hits, growth begins to feel more organic and less forced, and the startup’s biggest challenge shifts from “How do we get customers?” to “How do we handle all these customers?”. If you’re still unsure whether you’ve got PMF, you probably don’t have it yet. The shift in user demand usually makes it undeniable. Engagement & Retention Curves Track daily or monthly active users (DAU/MAU). Look for a “flat-ish” retention curve—where users don’t drift away over time. Basically, high-retention and low-churn. If people stay (and barely anyone leaves), that’s an awesome signal. Leading vs. Lagging Indicators Leading: Is your onboarding smooth? Do people quickly find their “Aha!” moment? Lagging: Are you seeing steady revenue growth, a healthy LTV (lifetime value), or improved churn over time? Move fast on leading indicators to keep churn from sneaking up on you. Cohort Analysis Group users by the month or quarter they joined in—watch how each cohort performs. If newer cohorts stick around better than older ones, your product is improving in the right ways. Net Promoter Score (NPS) A score above 30 is nice; 50+ is even better. High NPS means fans will do your marketing and spread the word for you. When people naturally start recommending you to friends, you’re in a good spot. The 40% Rule Ask your users, “Would you be very disappointed if you couldn’t use our product anymore?” If 40% or more say, “Yes, I’d be devastated,” you’re in a solid spot. LTV vs. CAC Lifetime Value should beat your Customer Acquisition Cost i.e., LTV > CAC. Even with love from customers, you can’t stay afloat if you’re losing money on each user. “If that retention curve settles nicely, you’re probably onto something special” — From Reforge Start with a Well-Defined Problem Figure out exactly which pain point you’re solving. Vitamins vs. Painkillers: Aim to be a “painkiller”—something people need—rather than a “vitamin” that’s just nice to have. I have written previously about how builders can use both.3 Develop a Minimum Viable Product (MVP) Keep it simple and focused on the one main thing users have to do. Gather feedback ASAP, then iterate, iterate, iterate. Identify Your Core Usage Loop “What’s the main thing people do again and again to get value? Optimize that first” — From Reforge Optimize Activation & Onboarding You want newbies to hit that “Oh wow, I love this!” moment fast. “Leading indicators (like activation rates) will tell you if you’re on track before churn wrecks the party” — Brian Balfour (Reforge) Continuously Refine Through Cohort Analysis Check how each group of new users behaves. If your newest users keep getting happier, you’re definitely making progress. Iterate on Pricing & Monetization Don’t shy away from charging if you solve a real pain point. Make sure your costs (CAC) stay well below what each user is worth (LTV). Establish Feedback Loops Talk to your users, run surveys, and analyze behavior data. PMF isn’t “done” once you have hit it—it can shift as you grow or pivot. Pro Tip: Watch your cohorts and run ongoing retention checks to make sure your product stays essential over time. “A Few Paying Customers = PMF” Reality: You need steady, repeatable demand — one-off sales won’t cut it. “Once We Have PMF, We’re Done” Reality: The world changes. So should you. Keep improving. “Large Market Alone Guarantees PMF” Reality: Big ponds can still be empty if you don’t solve a real problem well. “It’s All About Growth” Reality: Retaining happy users beats chasing vanity metrics every time. Tiny Total Addressable Market (TAM) You might be a hero in a small niche, but can you scale? Unsustainable Unit Economics If you spend $10 to earn $5, you won’t keep the lights on for long. Weak Differentiation If others can copy you easily, your traction might vanish overnight. Poor Team or Culture Even the best product can’t save a team that’s constantly at odds. PMF is that awesome moment when people truly get your product and show it by sticking around and telling others. But it’s just one part of the 0-to-1 journey. Keeping an eye on the costs, standing out from the crowd, and building a team are just as important as your product. Once you have PMF, the real fun and challenges begin :) ## Comments **tim**: > “Retention is the ultimate indicator of product-market fit. If people don’t stick around, you don’t have it.” — Brian Balfour (Reforge) Mac and I, sometimes we exclusively think of retention as: "How can we notify or contact people about what happened on our product" because our frame is that people visit Kiwi and immediately forget that it existed. But actually, for example, although it is an outlier, Chatgpt didn't have an elaborate notification system that reminded its users of its existence. Yes, OK, they spent millions to train this model, OK. But still, they didn't need all these bells and whistles because the value they provided was so incredible and people loved the product so much that they kept coming back. I think this is a wise consideration, that while the ability to contact users at a later point in time is important, it actually isn't the only way to create retention. Other methods are: - Users loving/needing the product (Chatgpt, Pirate Wires, iOS) - People taking a stance against other products (Linux, Android, Bluesky) - The only game in town (Polymarket)