Source

Framework developed by First Round. I heard about it first here: Lenny’s Podcast: A Framework for Finding Product Market Fit w/ Todd Jackson

Framework Context

This framework is designed to work for B2B; some principles may apply to B2C
Ultimate goal is to achieve “extreme product market fit”

Definition of Extreme PMF

A state of widespread demand for a product that satisfies a critical need, and crucially can be delivered repeatably and efficiently to each customer.

Elements of PMF

There are three elements of PMF. Without all three you only have partial PMF.

Satisfaction → customer loves the product because it solves a real need
Demand → many customers want the product, enough to sustain the business
Efficiency → product can be delivered sustainably and repeatably at scale to meet demand

Levels of PMF

Most businesses go through different phases or levels of PMF. B2B businesses should focus on PMF in the following order:

	Name	Focus	Context	Timeframe	VC Stage
Level 1	Nascent	Satisfaction	First 3-5 customers; <10 team members; totally okay to be very inefficient; mostly ignore unit economics; must nail satisfaction	12-18 months	pre-seed, seed
Level 2	Developing	Demand	5-25 customers; growing sales channel(s); unit economics start to matter: sales conversion rates, retention rates, and efficiency metrics; must nail demand, want fish to start jumping into boat	12 months	seed, A
Level 3	Strong	Efficiency	scale demand channels, high ACV, efficiency metrics; competition increases; certain channels saturate; balancing growth and expenditures; must nail efficiency to thrive and scale beyond 25 customers	2 years	B
Level 4	Extreme	All	expand TAM via new markets or products, continue growing	After 4-6 years	C, D

Levers of PMF

<aside> 💡 “Your product has to deliver a promise that solves the problem of your persona.”

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When you’re stuck at a specific level, consider which levers to move. In more traditional speak, how should you pivot?

Lever	Definition	Change Action
Persona	The customer or market	Find a better customer, maybe one that perceives the problem as more important
Problem	The pain the persona experiences	Find a more important or urgent problem
Promise	The solution to the persona’s problem	Find a more valuable promise; unlock new revenue, increase existing revenue, cut expenses
Product	The tool that enables the promise	Build a better or different tool that enables the promise