Andrew Chen has a great presentation on what product market fit looks like, along with some key metrics to judge whether you've reached the optimal stage.
Here are some highlights:
- Product market fit takes years, not months, to reach.
- Ideally, there's lots of successful competition with traction (but hopefully they're fragmented, incompetent or on a different platform)
- Easiest path to P/M fit: clone 80% of an existing product and create something innovative on the remaining 20%
For Saas products, P/M Fit looks like:
- 5% conversion from free to paid
- 3X Cost Per Acquisition (CPA) to Lifetime Value (LTV) ratio
- <2% monthly churn
- Clear path to $100k Monthly Recurring Revenue (MRR)