Glossary
Product-Market Fit
The point at which a product satisfies strong market demand — users love it, retention is high, and growth becomes easier.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Product-market fit (PMF) is the degree to which a product satisfies a strong market demand. Marc Andreessen's original definition: "being in a good market with a product that can satisfy that market." More practically: your customers are happy, retention is strong, and growth happens with less effort than before.
PMF is not a single moment — it's a spectrum, and you can lose it. Early PMF evidence: high retention (users come back), strong word-of-mouth (low CAC relative to growth), and the Sean Ellis test (>40% of users would be "very disappointed" if the product disappeared).
Pre-PMF, growth is expensive and retention is poor. Post-PMF, growth accelerates and unit economics improve. The most common early-stage mistake: raising a large growth round before finding PMF and burning capital acquiring customers who don't stay.
India Context
Indian founders face a specific PMF challenge: initial Indian users (urban, tech-savvy, early adopters) often behave very differently from the mass Indian market the business needs to reach for scale. PMF with 500 Bengaluru users on ProductHunt is meaningfully different from PMF with ₹50 lakh MRR from SMBs in Tier-2 cities.
The Indian PMF test for B2B SaaS: are 5+ paying customers renewing without heavy-touch founder involvement? For consumer: do 30-day cohorts retain >40% to day 30 without incentives? These are harder to fake than the engagement metrics Indian startups often report.
Example
A productivity app tracks its PMF indicators: D30 retention 55% (strong), Sean Ellis score 48% "very disappointed" (above 40% threshold), CAC declining 20% quarter-over-quarter as word-of-mouth increases, NPS +42. All four indicators crossing thresholds simultaneously — a strong PMF signal in the specific segment they've found fit in.
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