When to Stop Working on Product and Start Growing Your Startup

Austin Smith

All too often, we see founders of young startups make the common mistake of working on growth immediately. Excited with all the exuberance of possibility, they spend the majority of their time planning out social ad campaigns, optimizing conversion funnels, and focusing on honing their brand messaging – even though in reality, their product isn’t ready for growth yet and they need to work on optimizing the product itself.

However, it’s equally common for founders to make the mistake of focusing only on product and never on growing their company. Trying to grow a poor quality product may be useless, but even a great product won’t succeed without some effort put into growth.

So what’s the ideal balance? How do you know when you’ve hit that critical moment and should start focusing on growing the company instead of improving the product?

The answer is the holy grail for startups: product market fit.

The Turning Point: Product Market Fit

Product market fit (PMF) has many definitions, but perhaps the most commonly cited definition comes from Mark Andreessen:

“Product/market fit means being in a good market with a product that can satisfy that market.”

Generally speaking, this is the turning point at which you want to switch from focusing solely on product to working more heavily on growing the business. PMF is like a greenlight for your startup: achieving it signals that you’re on the right track and that, at least for the time being, you have a strong enough product to warrant dedicated growth efforts.

This is well and good – but if we look at Andreessen’s definition of PMF, it doesn’t actually tell us much. What defines a “good market?” How do you know if your product can truly “satisfy” that market? And what concrete metrics can you track to indicate when you finally cross the threshold?

Solving the PMF Puzzle

In reality, there are no clear-cut answers to this question. PMF is inherently an ephemeral milestone, and it looks different for each product and business. But that doesn’t mean there’s no way to determine if you’ve reached product market fit – it just means we need to piece together a number of factors to evaluate it.

What factors to look at depends greatly on the nature of your product and business, but for digital products, there are a few general categories of metrics to look at.

In-App Metrics

Perhaps the first, easiest place to look for evidence of PMF is within the product itself. If you’re creating a mobile app, for instance, you can start looking for evidence of PMF even during user testing. Here are a few key metrics that might indicate a good product market fit:

  • App Session Time: Users are spending more time in your app each time they open it – the app gets “sticker.”
  • Average Opens Per Day: If users are going back to your app multiple times per day, that’s a great sign.
  • Retention: Retention is one of the most important metrics for mobile apps in general, and an increase in retention is a strong indicator of PMF.

Growth & Business Metrics

Outside of looking at data that comes from the app itself, you can also look at more general business metrics to identify PMF. Any of the following may be a good sign of achieving product market fit:

  • Word of Mouth: Even in the age of digital advertising, word of mouth referrals are still extremely important. Increases in word of mouth-based referrals from current users show your product is strong enough to conquer the market on a larger scale.
  • Dependency: This won’t apply to all mobile apps, but in an ideal world, your users either couldn’t or wouldn’t want to live without your app. It’s hard to get this information passively, so you may need to do some user interviewing to try to measure this.
  • Revenue Growth: This may seem obvious, but any increase in revenue is a good sign for PMF.
  • User Growth: Seeing a sharp uptick in sign ups or new users is always a good indicator for PMF.
  • Shorter Conversion Cycle: If you’re seeing your users converting faster, that means your product is getting closer to PMF. For mobile apps, “conversions” may mean anything from making an in-app purchase to simply creating an account.

Piecing It All Together

No one single metric will be able to tell you if you’ve achieved product market fit, and because there are no set benchmarks, it’s often hard to determine – but that doesn’t mean it’s impossible. Take a holistic look at the factors above alongside any other relevant data for your business or product, trying to spot the patterns that might indicate strong or weak PMF. By considering everything carefully in relation to the nature of your specific industry and product, you can make an accurate determination of whether or not you have PMF – and, consequently, when it’s time to stop focusing on product and start growing your startup.