Product-User Fit Comes Before Product-Market Fit

Product-market fit is “the only thing that matters” early on in the startup journey, wrote Marc Andreessen in June 2007. Conventionally, product-market fit comes down to early signals that the market has voted your product as the best solution to its problem. In the enterprise, undeniable evidence of product-market fit shows up when an early cohort of evangelical customers are ready to pay more, new prospects are banging down the door to get access, and market demand far exceeds your ability to satisfy it.

While you can “always feel when product/market fit isn’t happening” and when it is, reaching that fit requires both the right product and the gravitational force from the market pulling the product. If you’ve got product-market fit, you’ll likely have the revenue and customer traction to prove it. Product-market fit is not only knowing that your product solves the problem, but also that the market is waiting for you to convert latent demand into paying customers.

But what if you really just have a sharp understanding of the right product for the right user… but still lack a sense of the greater market opportunity of all the right users? What if it remains to be seen if there is a market beyond the 200 people you’ve found who love your product?

The honest version of “we’ve got product-market fit on a small cohort of very early power users” is “we’ve got product-user fit.”

Product-User Fit: The extent to which you’ve built the right product for the right user.

We often hear founders claim product-market fit victory once they have a sharp sense of the right product for the right user, but are in the very early days of getting the product in the hands of paying customers. Self-declared product-market fit is frequently part of the script when hiring promising talent, talking to customers, iterating on product, and of course, fundraising. At that point in the journey, you may have a sharp understanding of the right product for the right user, but still lack a sense of the greater market opportunity. And that’s perfectly fine! However, it means we’re not talking about product-market fit anymore, we’re really talking about product-user fit.

Product-user fit is an important step in the journey to product-market fit, in which nailing the product to win over the right user is essential. The path from product-user fit to product-market fit is all about answering a few core questions: Who really wants this today? How many of those people are out in the wild? What else would it take in the product to turn non-users into users of our solution? What macro story must play out in the market to substantially shock market-wide demand?

The jump from product-user fit to product-market fit is no trivial leap. Skipping what to focus on during the product-user fit stage and prematurely racing to spark the market adoption can actually decelerate your path to product-market fit. Forcing growth on a product that isn’t yet ready for broader adoption will not ultimately convert to a market of highly retained, happy users. And if you don’t listen to the early power users closely enough, you may never discover the insights that get you to a world-class product.

Power users are the biggest sign of product-user fit. Making the leap from product-user fit to product-market fit is about listening to these users to evolve your product to attract more users.

The conventional ways to observe product-market fit don’t tell us much when it comes to product-user fit. To understand product-user fit is to understand why your power users are power users, their user behavior, and how to evolve the product to create more power users.

Power users are an early indicator that a company is really onto something. Maybe only a small segment of the entire user base remains active on a daily basis without any warning signals of churn, but even if power users account for only a narrow slice of the current user base, is there a big pool of users who look just like them out in the wild, waiting to adopt your product? Do you hear wishlist style feedback from users who tell you exactly what features would make them power users? Are your power users evangelically, bordering on annoyingly, trying to get other people to become users? Anyone who remembers talking to someone who owned a Tesla Roadster when it first came out, remembers those early users couldn’t stop talking about it. Think those users were showing off because Tesla was exclusive? Maybe, but Dropbox had the same rabid fanbase of early users.

When exploring products that have only been in market for a short amount of time, the behavior of power users is often more interesting and important than any aggregate metrics. If the goal is to “make something people want,” then continuously talking to and observing early power users is the only way to really understand what drives both user retention and non-user activation. Pay particular attention to the following three things:

  1. Durable retention that proves users are here to stay: Since the early adopters often carry the strongest intent to experiment with different products, what features will win them over for the long run? Even if there aren’t many of them, are the early users sticking around? Are they using your product every single day? For those who churn, do you know why? And for others who pop up but never convert into using the product at all, what explains their rationale? Do users who activate with a work email reflect a stronger intent to stay than personal email addresses perusing Product Hunt every morning? Are there specific activity thresholds in the product that suck users in so deeply that they’re more likely to stick around?
  2. Engagement depth that maps to the natural user behavior: How well user behavior maps to what you’d expect if they really loved the product reveals if you’ve actually made the right product for the right user. How well does the frequency of user engagement map to the natural cadence of the underlying activity? Though it depends on the product, this dynamic should show up empirically in user frequency (e.g. DAU/MAU, WAU/MAU, L7, L30, etc) and activity depth (e.g. average session length, aggregate time per day, etc). Seeing users only in a product for an hour each week could be great for a tool in use during a 1:1 with their manager, but underwhelming for a communication workflow that happens daily.
  3. User testimony that evangelizes the value: Does the qualitative feedback from users reflect that they are desperate for your product? Do they talk about it as if it’s changed their lives at work? Is it up to 10x better than the status quo? Rahul at Superhuman anchors around how many users would respond “very disappointed” if they lost access to the product as a powerful signal. The gap between “disappointed” and “very disappointed” could be the difference between users who churn within a week and users who will put up with all the bugs in early versions of the product.

Notice that none of these are a function of scale, or growth. That comes not when product fits the user, but when product fits the market. It’s far from easy to time the trade-off between delighting the current users and hunting for new users, but as with product-market fit, product-user fit is also something that you can feel when it’s right.

And in enterprise startups, the journey from product-user fit to product-market fit tends to go:

  1. Build something people want.
  2. Then, explore how many other people also want that thing.
  3. Finally, get your product in their hands as fast as possible.

In rare circumstances, market pull can be so overwhelmingly strong from day one that the ride from product-user fit to product-market fit goes by in a flash, with no perceptible middle ground between these two states. More likely, there will be a deliberate dance to iterate on the product against early user feedback, before you can ever spark gravitational pull from the market.

With the wave of bottom-up adoption around enterprise software, more products are finding product-market fit that previously only found product-user fit. In the latest generation of enterprise technology, end users vote with their feet instead of procurement driven by centralized buyers sitting deep inside the IT department. With the world getting more sophisticated around adopting technology in general, the market opportunity for SaaS products is bigger than ever. In a self-service model, growth can come automatically with product-user fit with the race on to buy servers and scale to meet demand. Furthermore, Many highly specialized products – whether for a specific industry or narrow use case within a company – that wouldn’t have supported a high-growth company a decade ago can now unlock big markets if the product delivers enough value to the user.

In almost every case, a key driver of bottom-up adoption is to listen to early power users closely in order to discover the insights that get you to a world-class product. As you progress down the roadmap, the right new features activate non-users into users, and then turn new users into power users. As you unlock more and more new users, eventually the product satisfies enough market demand to add up to a promising market opportunity.

So while we still think of product-market fit as “the only thing that matters,” product-user fit is almost always the thing that matters right before the only thing that ultimately matters.