Building a Startup: The Two Engines of Product-Market Fit

July 11, 2023

Building a Startup: The Two Engines of Product-Market Fit

By Maddie Wang

As an early-stage founder, achieving product-market fit is the most critical milestone to pursue. According to Mar Hershenson, managing partner at Pear VC, there are two engines required to find product-market fit:

Engine 1: Build a product people really like

The first engine is building a product that customers genuinely like and value.

Some metrics to optimize for Engine 1 include:

90% of new users are still engaged after 30-90 days.

For my business, if 90% of people who joined this month are still engaged and 80% of people who joined 3 months ago are still engaged, that shows strong product-market fit.

New cohorts are increasingly engaged.

Each new group of users you bring in should be stickier and more engaged than the last. This shows you're improving the product and experience.

Usage and revenue are growing steadily.

Whether it's transactions, time spent, or dollars, metrics should be moving up and to the right.

Engine 2: Build a growth engine

A good growth engine has a few key attributes:

It's repeatable and scalable.

The growth tactics work for new customer cohorts and at higher volumes. They aren't reliant on the founder's "superpowers."

The CAC:LTV ratio is efficient.

The cost to acquire a new customer (CAC) compared to the lifetime value of that customer (LTV) is greater than 1. For many companies, 3x or higher is a good target. This shows customers are profitable and the business model works.

Growth is accelerating.

It's getting easier and faster to acquire new customers over time. This indicates strong product-market fit and a scalable growth engine.

Someone other than the founder can drive growth.

If growth relies entirely on the founder, it likely isn't scalable or repeatable. A good growth engine can be operated by another team member.

In summary, finding product-market fit requires building both a product people genuinely love and value as well as a scalable growth engine to reach new customers. Focus on these two engines, achieve strong metrics in both, and you'll be well on your way to product-market fit and startup success.

Best of luck from

Maddie Wang founders of founders cafe solo founder
Maddie Wang
Gay / Solo-Founder / Stanford Dropout

I'm building Founders Cafe because as a solo founder, it can be very isolating. Last year, I lost 4 co-founders and a best friend on a previous startup.

Previously built a Minecraft Server ($61k), Amazon Store ($120k), and Queer Chart, where I met my girlfriend & close friends.

If you're interested in joining the Founders Cafe, let's talk and if it's a good fit, down to invite you!

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