Let's start with Product-Market Fit. Before we dive into how to engineer and assess PMF, let's establish a clear definition.

And there are a ton of definitions floating around. But here’s one we think most can agree with:

Product–Market Fit is the degree of alignment between what your product offers and what a good market actually wants. The better the alignment, the easier growth becomes.

A Couple Important Call-Outs

1. Good market. You can satisfy a market and still struggle if the market is over-competitive, tightly regulated, or the customers within it are hard to reach.‍
2. Degree of alignment. PMF isn’t binary; it sits on a spectrum. Waiting for a magical threshold and expecting demand to pour in is not a strategy (more on this below).

1. PMF Is Critical, But Not Sufficient

The most common mistake we see founders make is assuming that achieving Product-Market Fit is all it takes to grow. This misconception has been perpetuated by thought leaders who claim that once you have PMF, "the floodgates open" and growth becomes effortless. 

While there are some (rare) instances of this happening, the reality for most is far more nuanced. In short, PMF is not a binary state. It’s a spectrum.

So yes, for some, the floodgates do seem to slam open overnight. And they were at the very extreme end of the spectrum.

Though, to be technical, we’d also argue that the “tipping point” wasn’t a result of PMF.

Instead, it’s much more likely that it was the moment that their growth catalyst flywheels (which we overviewed in the DC Growth System) reached critical mass and began to self-perpetuate.

The reality is that there's a graveyard of startups that had “good” Product-Market Fit but still failed to achieve sustainable growth. Check out Failory’s Graveyard for examples.

We fully agree that Product-Market Fit is critical because every fit of the Foundational Five is critical.

Why we are talking about this, though, is not to argue what PMF is or the importance of it.

We bring this up for very practical reasons. We see founders all the time who believe that all they have to do to grow is crack Product-Market Fit. And that tunnel-vision thinking results in them neglecting the rest of the system.

So our perspective is that, yes, you do need strong Product-Market Fit in order for the whole machine to work. But Product-Market Fit in isolation is not enough.

Which leads us to one more important concept (hat-tip to Brian Balfour for this): A simple but powerful reframe is to think of it as Market-Product Fit.

This small change in language puts the market at the center of the equation, which is why it's also at the center of our Foundational Five framework. And this simple reframing will hopefully help founders and product builders avoid the all-too-common mistake of building a product that is in search of a market.

Our goal is to start with the market and build a product for that.

2. Engineering the Fit: Creating Through-Lines

So, how do you actually engineer this fit?

You create clear "through-lines" between the specific criteria of your Market and your Product.

Later in this chapter, you'll be defining your complete Foundational Five using our Master Strategy Project, which will take you through a comprehensive set of inputs for each foundation. For now, let's examine the key criteria we use when assessing Product-Market alignment.

For our fictional meditation app, Mindful, we can map the following through-lines:

As you can see in this table, good Product-Market Fit creates direct through-lines where each Market criterion aligns with a corresponding Product criterion.

The Product's core value proposition directly addresses the Market's primary motivations.

The value proposition is engineered to deliver on the promise of quick relief. .

3. Assessing the Fit: How to Know You Have It

Above, we examined how to engineer Product-Market Fit from the ground up. Now, let's discuss how to assess and measure PMF once you've turned on the engine and have a steady stream of users.

When it comes to measuring Product-Market Fit, we want to use two different tools. We want a tool that allows us to detect leading indicators of Product-Market Fit, and we want a tool that allows us to more precisely measure actual Product-Market Fit based on real user data.

Qualitative Signals (Leading Indicators): You can't always wait six months to assess Product-Market Fit. Fortunately, you can use qualitative signals to capture leading indicators of PMF.

There are two common tools for this:

• ‍Net Promoter Score (NPS) is a staple that measures how likely customers are to recommend your product.
• ‍Sean Ellis's customer survey is another powerful tool that simply asks: "How disappointed would you be if you no longer had access to this product?"

Don't overthink which one to use—the more important thing is just having a qualitative measurement in place to track early signals of fit.

Quantitative Signal (Trailing Indicator): The single most important signal is a flattening retention curve. When you look at your user cohorts, you will always see an initial drop-off.

However, if a meaningful percentage of users are still actively engaging with your product at month three, month six, and beyond, you likely have PMF.

The curve flattens, indicating you have a core group of users who are getting long-term value.

This is really all you need to assess PMF. Again, the PMF discussions are noisy—everyone has their own definition.

Retention as our ultimate metric is our preferred method because of its simplicity and objectivity.

4. Important Considerations

Can You "Feel" Product-Market Fit?

It's popular for people to say that PMF is hard to measure, but you'll just "feel it" if you have it.

We think that's an unhelpful perspective because it comes from the top 0.01% of the most successful companies that have ever existed.

If you were at Facebook or Snapchat in the early days with hundreds of thousands of users flowing in daily, yes, you would absolutely feel it. But that's not the reality for most companies.

For the vast majority of companies, you could have Product-Market Fit but may not "feel it." You can build a successful company without having a 99.9th percentile PMF.

Most healthy, successful companies exist somewhere in the middle of the spectrum and never reach that extreme end.

And it's for those companies where Foundational Five alignment becomes critically important.

The farther you get from that high end of the spectrum, the more that full foundational alignment matters for sustainable growth.

PMF is Not Binary: As touched on earlier, despite what some thought leaders claim, Product-Market Fit is not a simple yes-or-no proposition. It exists on a spectrum. The stronger your alignment, the easier growth becomes. The weaker the alignment, the more difficult growth will be. This spectrum thinking is fundamental to the Foundational Five framework.

Markets Evolve: Market is one of the foundations that we do not own. The market is its own living entity that shifts and evolves over time. Customer needs change, competitive landscapes shift, and new technologies emerge. This means Product-Market Fit is never "done"—you must constantly respond to market shifts and optimize your alignment to maintain and strengthen your fit.

False Negatives: You can easily create a false negative if you're testing your product on the wrong audience. If your channels and messaging are bringing in people who aren't your target market, you might conclude you don't have PMF when, in reality, your intended market never even touched the product.

This is why aligning your Market, Brand, and Channel is so critical—a lesson we'll explore in the upcoming sections.