B2B PMF

After driving growth within early stage companies for the last 15 years, I figured I would put together some small thoughts on product-market-fit within the context of business-to-business GTM motions.

For web3 operators in particular, be wary of using these traditional mental models of PMF knowing that the incentive relationship with your customers are typically much more nuanced due to tokens potentially modifying customer and market behavior, which doesn’t exist in traditional web2 B2B GTM motions.

TLDR on B2B PMF

It generally involves five key steps:

1. Get at least one super supporter for your product.
2. Convert one of these supporters into a high paying customer.
3. Scale to multiple high-paying customers who genuinely love and promote your product.
4. Experience organic demand through word of mouth.
5. Continue feeding the flywheel by investing in growth and staying close to customers.

Intro

Finding PMF in B2B feels much more lumpy and bumpy than anything remotely resembling a linear step-by step process, but I think the 5 step process is still a helpful heuristic.

Historically for web2 B2B companies, their journey to PMF took multiple years before achieving real PMF. The journey can be visualized as a process starting at an ice freeze cold start, then a bit of warmth with initial excitement from early demand and then eventually turning into hot & stable organic demand, as customers turn into advocates who help you build better product and bring in net-new customers for you.

I will break it down into five steps to help you assess where you are in the process, but I recommend talking with other founders and operators to get their perspectives (again, especially for the web3 folk with unique market dynamics). With typical market dynamics, if you’ve been working on an idea for over two years without feeling PMF, it may be time to worry, and if it’s been over three years, it’s time to reassess and/or pivot quickly. Let’s look at the 5 step journey.

Step 1: Get at Least One Super Supporter

The first step towards PMF is finding at least one company or individual who becomes a super supporter of your product. This is someone who is using the product and also enthusiastic about it and wants to see it succeed. This early adopter is invaluable because they can provide you essential feedback to build better product and are a potential champion for you in your growth journey.

Takeaway: The market will let you know if what you are building is exciting to anyone at all.

“You don’t need to please everyone at first. Focus on making your product incredibly valuable for just one key customer.” — Barry McCardel, Hex

Step 2: Convert a Supporter into a High-Paying Customer

The next step is turning one of these supporters into a paying customer who is willing to pay a non-trivial amount of money. This step proves that what you are building has value and that users see it as worth investing in. This shift from free users to paying customers signals you’re on the right track towards PMF.

Takeaway: The market will pay for what it feels is valuable.

“For us, it was when we landed our first contract that was in the six figures. It was a moment of realization: ‘Wow, a company is actually willing to pay us this much.’ I kept being surprised they didn’t push back on the prices we presented.’ — Julianna Lamb and Reed McGinley-Stempel, Stytch

Step 3: Scale to Multiple High-Paying Customers Who Love Your Product (and provide feedback)

After closing that first big deal, the next step is getting more users/companies to sign on and actually love your product. This means securing multiple customers willing to pay that non-trivial amount of money and give feedback to improve your product.

Takeaway: The market will tell you what it needs and/or how you can improve, and you should listen.

“It wasn’t until we had about 10 customers really using and benefiting from our product that we felt we hit product-market fit. I recall a deal where our advocate was so frustrated with budget denial, she left her job — and she’s now one of our customers. That was a key turning point for us.” — Rujul Zaparde and Lu Cheng, Zip

“In the very early stages, the only measure that truly matters is whether you can close more than 10 customers, and whether you’re confident you can continue closing more.” — Rick Song, Persona

Step 4: Feel Genuine Organic Demand, Often from Word of Mouth

Once you have several paying customers who genuinely love the product, the next step is feeling a shift from pushing your product on people to having people come to you asking. This often happens through word-of-mouth referrals from those customers you closed in step 3 who value your product enough to recommend it to others. When demand becomes organic, it’s a powerful signal of PMF.

Takeaway: The market will organically discover and share your product once it’s good enough.

“The best initial indicator is whether any of your users love your product so much that they naturally recommend it to others.’” — Sam Altman, AI Overlord.

Step 5: Feed the Flywheel

This final step is to keep feeding the flywheel, which means continually investing in growth, building better product, evolving with market demands, and closely listening to your users. This stage is about scaling while ensuring you stay in touch with customers so your product roadmap stays in sync with the demands of the market.

Takeaway: The market is right. Don’t forget to listen.

“The life of any startup can be divided into two parts — before product/market fit and after product/market fit.” Marc Andreessen, a16Z

Conclusion

There are many great mental models and heuristics to track the progress of B2B PMF, but I have found this 5 step process to be relatively straight forward and useful. If you have your own thoughts or disagree with me, please let me know as I would love to expand how I am thinking about this.

About the Author

Hey, I’m Anthony Bertolino. I’ve been obsessed with start-ups, marketing, product, and growth since a very young age. For the past 7 years I have been focused on Ethereum and the new open global coordination system we’re all building together. Feel free to read some of my other work, and connect with me on Linkedin or Twitter.