How To 'Perfectly' Identify Product Market Fit [Podcast]

Originally published on Sep 20, 2016

Last updated on May 17, 2022

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How To 'Perfectly' Identify Product Market Fit [Podcast]

This article is a result of Vivek Khandelwal's #InConversation with Arpit Agarwal-who is the principal at Blume Ventures. Key takeaways here will help you chase and identify product market fit.

As mentioned in our earlier post on ‘Understanding Product Market Fit’, all businesses must focus on their customer’s needs in order to identify product market fit for themselves in the best possible manner. For instance, let’s look at a case of a Cloud Telephony service. As per the Founder, say a developer, cloud telephony service may work very smoothly from a functionality point of view. However, it may not work in a ‘way’ that a customer wants it to. For a real estate broking firm which receives 100’s of leads only via calls, cloud telephony  solution might not be apt. It is not obvious to the Founder (Developer) to understand the kind of the features that a specific customer wants. It is essentially through chasing the product market fit, that these gaps are filled.

Should You Chase Product Market Fit on Day 0 or Day 100?

Typically it happens between Day 0 and Day 100. It is a process with which you will reach Day 100 - without this, you will probably not. At Day 0, you would typically have a customer and a need. Typically, when you have a prototype - a preliminary version of your software / hardware (something tangible), you expose it to a customer, they use it and they come back to you with lot of feedback. You use the feedback and iterate building a more robust / faster version / customer friendly version. Once you have achieved what the customer is expecting, you know that product market fit has been achieved. And you are delivering substantial value. 

Usually, this process can be very lengthy. At times, customers would have little idea about what they want / what can they get value out of. This is typically discovered by conversation (think consulting-driven approach) and by telling them how can they actually better use your product.

When finding the product-market fit, the most important phase is when you have “something” tangible to show to the customer. Only  then, the process and learning of product market fit start. So yes, it’s a very iterative process.

For Instance:

I love this brand and it’s not really a software. In my view, the cafe chain Chaayos has a great product market fit. How did they achieve product market fit is important to understand.  

The founder had  an idea that Chai can be served in a cafe format because a lot of people of like that it is an air conditioned, self-serve professionally run cafe which is  easy to access and serves Chai (which is the favourite Indian beverage) and coffee which the cafe’s were serving so far. Now when the product was created, this was the only idea. They invested some bit of money. In case of Chai Cafe, there are various other aspects and not just the location but also menu, pricing, flavors, service, music, seating arrangement et all. All of these things constitute “the product”. Over a period of time, the Founder figured that this format of Chai cafe would work well  for a particular kind of audience  Galleria (in Gurgaon). Once they had achieved the product market fit in this location, they had to figure out where else do similar people hang out . People with similar capacity to pay having  similar expectations. Another such location SDA Market in South Delhi. The cafe was an instant hit in the SDA market. This setup was then further repeated in more locations. The entire franchise is now very repeatable. (change the last line)

How to define Product Market Fit Achievement

This is hard - and hard because it is generic.

Every business has a different way of looking at a product market fit. But, a very generic definition would be: When some customers are willing to buy the product and are willing to pay a price, which makes sense for you to produce.

The lean process that will help you identify the product market fit


In case of a SaaS product, priced at a 5 USD per month. Customers are willing to pay 5 USD and you have enough customers that it makes sense to you. However, in a B2C case, customers may not be paying directly but are engaging by downloading your app. For instance, InShort App- users are downloading and using the app but are not willing to pay anything. Because the metrics are # of users, it can be said that product market fit has been achieved. If you are a founder and you are looking at product market fit, it is important to understand what is NOT a product market fit.When you have spent quite a bit of money on marketing and you also know the right channels of user acquisition but the product is still not growing. Any amount of telling more people about you, is not going to change the number of people who are actually using it.

Still wondering why you should chase product market fit in the first place? let's discuss some of the key benefits of product market fit for your business in our next post.

Listen to the complete podcast here.

About the author

Learn how to identify product market fit with Arpit Agarwal

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Founder at Datability Solutions. Second Venture. Writes about technology, entrepreneurship and mobile. Avid cyclist.

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