This term has been on my mind for quite a few months. Its the most unglamorous part of any business that is nearly never covered in the press. Its especially important for internet businesses as “it” will be put under a magnifying glass when the business scales.
So what is product market fit?
Simply put its, how well your product fits to current market needs. The better the fit, the more the market will demand it.
This could be how well your hamburger “fits” the taste profile of your target market to how well your travel app “fits” with how travellers want get their travel information.
The game of product market fit is that you get to define your product and your market (target demographic). If you are unhappy with the fit (best measured quantitatively) you can either make changes to your product offering or change your target demographic (or both). This continues until you are either happy with the fit or give up/run out of funds/your competitor gets there before you.
The wildcard in the game is you might need to achieve product market fit multiple times. This is because 1) as you grow, you widen your target market which might change how your product fits. ie. What fits perfectly for 1000 hardcore users might not fit as well for 100,000 users. 2) as time goes on people’s taste and preferences change as well. What use to fit them, just doesn’t seem to fit anymore (just like clothes).
Before a company achieves the sacred product market fit, the company should be as lightweight as possible, this is in terms of everything: financial, human, marketing overhead in order to be able to make quick changes. Everything must be able to be changed, if not it becomes deadweight the company must carry. This is the reason why large corporations do not survive fundemental changes in the market, as they carry too much deadweight (usually in the form of bureaucracy) for them to be fast enough to make the changes before competitors do.
In a nutshell: product market fit like reaching enlightenment: it is easy to say but hard to master.