Blume Beacon: Product-Market Fit Special Edition

A curated collection of long reads on Product-Market Fit from our content vault.

Editor’s note: We almost titled this edition “Product-Market Fit Hai to Hit Hai” (loosely translated into, if you have PMF, then you are a hit!), which sounded much more fun. But then…SEO. Sigh. On to the newsletter now.

“Product-market fit is the only thing that matters early on in the startup journey.”

This timeless quote by Marc Andreessen is especially relevant at a time when ‘heads-down-and-work-mode-on’ is the mantra. Achieving PMF unlocks many things for founders - customer’s willingness to pay for the product, a rush of inbounds, repeatable GTM, a stable retention curve, and scaleable growth. 

But, before one gets there, they are plagued with some ‘fundamental’ questions-- what is PMF? How can one achieve it? How does one even know that they have achieved it?

In this edition, we get you secrets, which the founders, operators, and investors earned the hard way, featuring:

• Ranjeet Pratap Singh, CEO, Pratilipi

• Abhishek Kejriwal, CEO, Kutumb

• Anshuman Bapna, Founder, Terra.do

• Arindam Paul, Chief Business Officer, Atomberg

• Shubham Goel, co-CEO of Affinity

• Sajith Pai of Blume Ventures

We’ve kept this newsletter short because each conversation featured here carries a wealth of knowledge. Happy reading!

“I don’t like the word PMF because it’s too vague…Start with the vision…then what does the end result look like?”

While this statement from Ranjeet Pratap Singh, Founder and CEO of Pratilipi, might seem like it is defeating the whole purpose of this newsletter, Ranjeet means one must do away with the esoteric notion of PMF. 

Ranjeet believes that a better framework is to see the early startup journey as one of verifying each of the hypotheses that need to hold true for the vision to be realized. 

He further discusses the dynamics of ‘network effects’ businesses, emphasizing how engagement and time spent typically grow with scale. He highlights liquidity as a crucial metric for gauging a network-effect marketplace's health and advocates starting with an "atomic network" to build liquidity. This strategy can then be replicated across markets. 

“There’s no single magical proxy metric that you can look at every single company and say, okay, this is PMF or that is PMF. In fact, as I say, I don’t even like the word PMF. Generally, the word that I use for consumer companies is typically liquidity. Do you have enough liquidity in the system?” says Ranjeet.

Ranjeet also advises tackling the biggest business risks first and points out that usage frequency is often the key metric for consumer app companies.

Know all this and more in this riveting conversation.  

“What happens when the app does not exist in your life?”

Abhishek Kejriwal, CEO of social community enabler Kutumb, is a PMF hacker, for the lack of a better word. 

Why do we say this?

“Kal agar ye app chale jaayega to kya hoga. We asked users what if this app didn’t exist tomorrow and tracked their responses, including the intensity with which they said, please don’t remove the app. We knew we had PMF when users replied with strong emotion or intensity, saying, please do not stop the app; we will pay so you can run the app,” said Abhishek. 

Abhishek and his team employed innovative strategies to understand the unique challenges faced by the Next Billion Users in India. They dug deep into user pain points through extensive conversations, leading to insights on Product-Market Fit (PMF) from both qualitative and quantitative perspectives, including customer reaction and retention metrics. 

They experimented with growth loops, succeeding on their second attempt, which kickstarted network effects and accelerated growth. Abhishek also emphasizes the importance of market size and addressing retention before scaling. 

Read more here. 

“PMF is not one S-Curve; it’s S-Curves stacked on top of each other.”

Anshuman Bapna, founder of ClimateTech startup Terra.do, and previously the founder of Mygola (acquired by MakeMyTrip), has an interesting way of defining PMF. 

“I can’t tell you what it means to be in love. But when you’re in love, you’ll know it,” says Anshuman. While he does say it is the ‘beer version’ of PMF, he is alluding to the state where you know that something is working out. 

“When you see stuff growing, for example, it might be that customers are arriving at your door without you doing any marketing spend. Or it might be that customers are actually coming in and doing NPS, and the NPS is like crazy, good NPS, and then crazy good NPS is leading to referrals,” he adds. 

But Anshuman, being the product person, dives deep into the product and business aspects of PMF throughout this conversation. 

In this chat, he delves into the biggest mistakes founders make, the best metrics to use at a consumer tech startup, and everything else. 

“If the (retailer) repeats are good for a product within 3-6 months.. that means the product has a very strong PMF.”

Atomberg is one of the most successful consumer appliance brands to emerge recently. What started with selling fans has expanded to other consumer appliances such as mixer grinders and smart locks. 

Arindam Paul, Chief Business Officer, joined Atomberg in 2015 as one of the early team members. From offline sales to marketplaces to D2C, Arindam has seen it all from the trenches. 

“So, when you launch (a product) on a marketplace, initially you’ll have to drive paid traffic to the page. 70-80% of your traffic would be paid & you start getting some kind of sales. Now, say 80% of your traffic is paid, and you are able to sell 100 fans in month one. If in month two you are able to reduce 80% paid down to 60% and that 100 goes up to 200, that means the indicator of PMF is positive,” says Arindam. 

This conversation covers a wide range of topics, starting with early PMF with B2B channels, expanding to B2C, and the importance of an omnichannel strategy for consumer brands (when it wasn’t the norm).

Arindam talks in depth about what he considers PMF (example above) and the two indicators he uses to track it. He also offers tips on how consumer brands should think about selling on marketplaces. 

It is indeed a must-read for consumer brands entrepreneurs. 

“Could (users) proudly say that this is the best thing they’ve used in a long time.” 

Shubham Goel, co-CEO of Affinity, a relationship intelligence platform, found success with a unique referral-led model built around ensuring customer success and delight within 30-45 days of onboarding the customer. 

In this conversation, Shubham explains his take on PMF and the importance of delivering value for consumers. He believes that PMF ultimately delivers customer value that can be measured in time spent or outcomes achieved in a repeatable manner across many consumers.

He also has some very practical advice for new founders. 

“Always find one or two founder CEOs of companies that are 18 months ahead of you in their growth journey, not more than that. It can’t be somebody who’s five years ahead. Because, the challenges in the early days are so specific and so idiosyncratic that the only people who can truly understand that and help you through it are the people who’ve just seen that,” says Shubham. 

We hope you find this conversation useful. 

Product-Market Fit: Nail It Before You Scale It

To round this edition up, we’ve got a well-researched piece from our very own Sajith Pai. Sajith’s wide-spanning reading and interactions on the topic make him the perfect ‘fit’ to give an overall perspective on this topic. 

This post delves into PMF's why, what, and how through various quotes, frameworks, and analogies. 

“First, arrive at the persona, then the channel to reach them, and the message that will help you describe the product. If something is not working, then change the message. Then channel (which is harder). Then and only if that is not working should you consider changing the  persona you are trying to reach,” writes Sajith.

This is just one of the many insights in this piece. Even if we are saying it, it is easily one of the best starting places for a founder to form an understanding of PMF. 

That’s it folks. We hope you enjoyed reading the newsletter. Signing off.

Rohit Kaul and Vignesh J