Everyone Says They Have PMF. Almost Nobody Does.
“We’re seeing great traction.” “Customers love the product.” “We just hit $50K MRR.”
These statements sound like PMF. They often aren’t.
Product-market fit is one of the most overused and misunderstood phrases in startup-land. Founders claim it when they have a handful of early adopters. VCs use it to describe any company that hasn’t completely failed. And most startup content gives you a checklist of proxy metrics that miss the actual thing entirely.
PMF isn’t a milestone you hit. It’s a state you enter — and more importantly, one you can fall out of.
Here’s how to actually read the signals.
The Marc Andreessen Definition Is Incomplete
Most people quote Marc Andreessen’s original definition: “Product-market fit means being in a good market with a product that can satisfy that market.”
That’s true but not actionable.
The more useful version: PMF is when pulling back on growth actually slows growth. When demand is creating its own pull. When customers evangelize before you ask them to.
Before PMF, you push the boulder uphill. After PMF, gravity helps.
5 Real PMF Signals (Not The Ones You’ll Read in Most Posts)
1. Customers are angry when you talk about removing the product
This is Sean Ellis’s “40% rule” — but the intent behind it matters more than the number.
Ask your active users: “How would you feel if you could no longer use [product]?” and count who says “very disappointed.”
But the richer signal? What they say after that. If they describe specific workflows that would break, specific value they’d lose, specific alternatives they’d be forced to use — that’s the signal. Vague disappointment is not PMF.
2. Customers use the product in ways you didn’t design
This one surprises founders. PMF often shows up not in “they love what we built” but in “they’re doing something with it we didn’t expect.”
They’re using your analytics tool to create board presentations. They’re using your collaboration tool to do customer success. They’re using your onboarding flow as a sales demo.
Unexpected use patterns are often your real market telling you what your actual product is.
3. Your best customers came from other customers — without a referral program
This is the organic referral signal. Not the “I gave my friend a promo code” kind. The “I told three people in my network to use this because I wanted them to” kind.
Before you launch any referral program, count how many customers came from existing customers. If it’s more than 20%, you’re onto something.
4. Your churn is cohort-improving
Most PMF discussions focus on current churn. That’s useful. But cohort trajectory is more revealing.
If customers who signed up in the last 6 months are churning less than those from 18 months ago — and you haven’t made dramatic changes to pricing or support — that’s a sign you’re getting better at finding and serving the right customers.
Improving cohort retention = compounding PMF signal.
5. Sales cycles are shortening without you changing your process
If prospects are reaching out pre-qualified. If discovery calls are converting at higher rates. If legal and procurement approval is moving faster. If the number of calls to close is shrinking.
None of this happened because you hired better salespeople. Something in the market shifted.
Often this is because your early customers have created a reputation effect — and your ICP now comes with context.
The Signals That Fool You
The “enthusiastic earlyvangelists” trap
Early adopters are not your market. They have unusually high pain, unusually low standards, and unusually high tolerance for broken products. They will pay, rave, and refer — and then your next cohort will churn in 30 days.
If your retention and satisfaction signals come entirely from your first 20 customers, you don’t have PMF. You have a fan club.
The vanity metrics trap
Revenue, downloads, signups, social mentions — these can all exist without PMF. The market is full of products that acquire customers through clever marketing and lose them through poor product-market alignment.
Track retention, activation, referral, and expansion. Revenue is an output of these.
The “we’re different from our competitors” trap
Differentiation is not PMF. Lots of products are different from competitors and still fail to find a market that cares. PMF is about alignment between your specific customers and your specific product — not about what you’re not.
The PMF Spectrum
PMF is not binary. Think of it as a spectrum:
Stage 1: Pre-PMF You’re still searching. Retention is low. Acquisition is push-heavy. Customers don’t reliably describe the same value.
Stage 2: PMF Signals You see retention improvement in a specific segment. 2-3 customers are acting like evangelists. Your ICP is narrowing. A clear use case is emerging.
Stage 3: PMF in a Segment You have strong PMF with a defined ICP segment. Retention is high. Referrals are organic. The motion works repeatedly.
Stage 4: Broad PMF The motion works across multiple segments or use cases. Growth is genuinely pull-based.
Most companies that successfully scale are at Stage 3, not Stage 4. You don’t need to have broad PMF to build a big company — you need to go deep in your segment first.
What To Do If You’re Not Sure
The honest answer is that most companies in the $0–$1M ARR range are somewhere between Stage 1 and Stage 2 — and that’s fine.
The problem isn’t not having PMF. The problem is not knowing which signals to watch.
Track these four things obsessively:
- 90-day retention by cohort
- NPS / Sean Ellis score (send every 60 days to active users)
- Organic vs. pushed referrals (how many new customers came from existing ones without incentive?)
- Time-to-value (how quickly does a new customer get the core benefit?)
If all four improve over 6 months, you’re moving toward PMF.
If one or more is declining, you have a signal to investigate — not ignore.
Final Thought
PMF is not a destination you announce in a funding round. It’s a living state that requires continuous maintenance.
Markets change. Competitors emerge. Customer expectations evolve.
The founders who build durable companies aren’t the ones who found PMF earliest. They’re the ones who stayed closest to the signals the longest.
Not sure if your GTM motion reflects your true PMF segment? Book a Discovery Sprint with DreamGTM — we’ll help you read the signals and build around them.
