The 5 Stages of Product-Market Fit: How to Reach the Summit

 

Yann Goarin

Founding a startup is like summiting Everest. Product-market fit (PMF) is the peak, and most founders try to sprint there in a single push, without oxygen or a map.

Seasoned climbers—and successful founders—know better. The journey to PMF has defined base camps. Each one demands different gear, techniques, and mindsets.

Treat PMF like a one-and-done milestone, and you'll likely flame out halfway up.

Product-market fit isn't a binary state you suddenly achieve. It's a continuum—a journey with distinct stages, each requiring different approaches, priorities, and metrics.

Last year, I met a founder who told me: "We're at $1.2M ARR, so we definitely have product-market fit." He was confident they didn't need any help optimizing their market approach. Six months later, he reached out to me. The situation had changed dramatically: he had let go of half his team, burned through most of his $4M seed round, and was desperately pivoting.

What happened? Despite "having found PMF," they had very disparate customer profiles, which led to unsustainable customer acquisition costs, 30% annual churn, and declining net revenue retention. Their initial growth came from burning cash, not from genuine market pull. They were in early validation but making expansion-stage investments—a misalignment that proved catastrophic.

The consequences of misdiagnosing your PMF stage are existential. Wrong priorities waste runway. Wrong metrics breed false confidence. Premature scaling doesn't speed up growth—it accelerates failure.

Understanding your current PMF stage brings clarity, focuses resources on the right activities, and dramatically increases your odds of success. Let me show you how.

The 5 stages of product-market fit

Think of your PMF journey like climbing a mountain. Each stage is a base camp with clear milestones before you can safely advance to the next level.

Stage 1: Discovery

You're here if:

• You have an idea, but haven't built anything substantial yet
• You're pre-revenue and pre-product
• You're still clarifying who your ideal customer is
• You're working to validate the core problem and value proposition

This is where you're exploring the terrain, determining if there's even a mountain worth climbing. It's tempting to start building immediately, but you should refrain from doing so until you have clear evidence of what you should build.

Consider Notion's journey. Before becoming a $10B company, they spent years refining their approach. As Notion COO Akshay Kothari has shared, "For about four years, the first four years, Notion actually didn't launch a product." Instead, they focused on deeply understanding their customers' needs and validating their value proposition.

Questions to ask yourself:

• Is this problem urgent and important enough for customers to pay to solve it?
• Who specifically needs this solution most desperately?
• Can we articulate a value proposition that resonates with potential customers?

Key Activities:

• Conduct 50+ deep customer discovery interviews
• Document patterns in customer pain points
• Test problem urgency and value proposition resonance
• Evaluate market potential and map competitive landscape

Success Indicators:

• Clear patterns in pain points across customer interviews
• Target customers can articulate your value proposition back to you
• Unprompted expressions of enthusiasm about potential solutions
• Initial willingness-to-pay signals

Stage 2: Validation

You're here if:

• You have an early product or MVP
• You're generating initial revenue or usage
• You have your first few customers providing feedback
• You're confirming product-solution fit with early adopters

Now you're setting up your first base camp. You've identified a path worth taking and built enough to test it with early adventurous climbers.

Superhuman's journey illustrates this stage perfectly. Founder Rahul Vohra didn't simply guess what features to prioritize. He implemented a systematic approach to measure product-market fit, surveying users about how disappointed they'd be if they could no longer use Superhuman. Initially, only 22% of users expressed strong disappointment, far below the 40% threshold Vohra targeted. By focusing on what those early enthusiasts loved and addressing their key concerns, Superhuman nearly tripled their product-market fit score to 58%.

Questions to ask yourself:

• Are early users actively engaging with our core features?
• Is our solution delivering on the value proposition we promised?
• What patterns are emerging in user behavior and feedback?

Key Activities:

• Pitch with mockups/lo-fi prototypes to identify narrow and eager customer segments
• Onboard the most highly engaged potential customers as design partners
• With them, build and launch MVP focusing on core value proposition only
• Gather deep qualitative feedback, iterate rapidly, refine core offering and positioning

Success Indicators:

• 3-5 similar design partners actively using your product
• Early customers describing your value clearly and consistently
• Unprompted referrals to peers
• Initial retention signals

Stage 3: Repeatability

You're here if:

• You have a full-featured V1 product
• You're generating growing revenue
• You're expanding beyond early adopters
• You're working to make customer success predictable

At this stage, you've verified there's a viable path up the mountain. Now you need to make the journey repeatable for more climbers, creating clear routes and consistent experiences.

Clay, a go-to-market platform that recently reached a $1.25B valuation, found themselves at this stage when they discovered their product resonated particularly well with sales teams. As Clay co-founder Kareem Amin explains, "I think product-market fit is, is this really providing value to people? Are they actually using it?" Clay narrowed their focus to help sales teams with outbound prospecting, which created the repeatability they needed to scale.

Questions to ask yourself:

• Can we deliver consistent success across multiple customers?
• Are we seeing patterns in what drives value for different customers?
• Can we predict which prospects will become successful customers?

Key Activities:

• Standardize the onboarding/implementation process
• Build repeatable sales or acquisition methods
• Formalize customer success processes
• Test and optimize unit economics

Success Indicators:

• Growing to 5-25 customers with consistent success patterns
• Net Revenue Retention approaching or exceeding 100%
• Predictable customer acquisition channels emerging
• Reduced founder dependency in customer success

Stage 4: Efficiency

You're here if:

• You have a mature product with proven value
• You're generating significant revenue
• You're focusing on optimizing key metrics
• You're building infrastructure for scale

You've established a popular route up the mountain. Now you're improving efficiency: adding better tools, training more guides, and creating systems to handle larger groups safely.

Slack's journey exemplifies this stage. After finding product-market fit with their communication platform, they focused relentlessly on optimizing their user onboarding and engagement metrics. They built systems to monitor team activation rates and message activity, allowing them to identify and address friction points before they impacted growth. This obsession with efficiency helped them grow from 8,000 users to more than 10 million in just a few years.

Questions to ask yourself:

• How can we reduce our customer acquisition costs?
• What operational bottlenecks are limiting our growth?
• How can we improve our unit economics?

Key Activities:

• Optimize acquisition channels for efficiency
• Improve key product metrics and engagement
• Build systems and processes for scale
• Strengthen team and organizational structure

Success Indicators:

• Multiple efficient acquisition channels
• Sustainable unit economics (CAC payback <12 months)
• Team expanding without losing effectiveness
• Clear path to profitability

Stage 5: Expansion

You're here if:

• You're a category leader with strong brand recognition
• You have substantial revenue and market share
• You're expanding to new markets or segments
• You're building sustainable competitive advantages

You've established the most popular route up the mountain. Now you're expanding to new peaks, building permanent infrastructure, and creating a sustainable operation that will last for decades.

Stripe exemplifies this stage. After establishing dominance in their core market of payment processing, they systematically expanded into complementary financial services (Stripe Treasury, Stripe Capital), new geographies, and built an ecosystem of products that reinforced their competitive position. Each expansion leveraged their existing strengths while creating new growth vectors.

Questions to ask yourself:

• How can we extend our reach into adjacent markets?
• What new products or services would add value to our existing customers?
• How do we protect and extend our competitive advantages?

Key Activities:

• Enter new market segments or geographies
• Launch complementary products or services
• Build strategic moats against competition
• Optimize for long-term sustainability

Success Indicators:

• Strong adoption in new market segments
• High net revenue retention (120%+)
• Sustainable competitive advantages
• Operational excellence at scale

The critical transitions: where startups falter

The most perilous part of any journey is transitioning between stages. This is where most startups falter.

Imagine a novice climber attempting to scale Everest in a single push. They might make early progress, but will inevitably collapse before reaching the summit. Similarly, founders who skip Discovery and go straight to Validation or try to leap from Discovery to Repeatability without building the necessary foundation are bound to fail.

Each transition presents unique challenges:

Discovery → Validation

• Risk: Building too early on unvalidated assumptions.
• Fix: Delay building. Focus on deep interviews and resonance testing.

Validation → Repeatability

• Risk: White-glove success doesn't scale.
• Fix: Identify patterns, build predictable paths to value.

Repeatability → Efficiency

• Risk: Growth at the expense of economics.
• Fix: Shift from "can we do this?" to "can we do this sustainably/profitably?"

Efficiency → Expansion

• Risk: Losing focus and differentiation.
• Fix: Expand from strength, maintain culture through careful scaling.

As founders progress through these stages, the pool of startups naturally gets smaller. Each transition is dangerous for different reasons, requiring different skills and insights to navigate successfully.

Diagnosing your stage and moving forward

When you misdiagnose your stage, you waste precious runway on the wrong activities, track irrelevant metrics, and set unrealistic expectations. Here's how to accurately assess where you are and chart the right path forward:

At each stage, you need to validate these five core components:

1. Market: Are you positioned in a growing category with clear demand signals?
2. Customer: Have you identified a specific segment with common needs and buying behavior?
3. Problem: Is the pain point urgent and important enough to drive purchase decisions?
4. Value: Can you articulate unique benefits that resonate with your target customers?
5. Solution: Does your product deliver on your promise consistently and efficiently?

Then apply these additional diagnostics:

• Assess honestly: Rate yourself on each stage's success indicators. Where are you strong, and where do you have gaps?
• Check dependencies: How reliant is your current success on founder involvement? Can you predict how new customers will respond to your product?
• Evaluate economics: Are your unit economics improving or deteriorating as you grow?
• Measure effort: How much do you need to educate prospects versus them already understanding their problem?

Once you've diagnosed your stage, focus exclusively on the metrics and activities that matter for that phase. Design experiments specifically to validate progression to the next stage, and build the necessary foundation before attempting to advance.

Create a clear roadmap for your next transition before you need it. When everyone on your team knows exactly which stage you're in and what success looks like, decision-making becomes dramatically easier.

The systematic path to success

The product-market fit journey isn't about reaching a destination but navigating successive stages successfully. Each represents a new level of validation, efficiency, and scale.

By understanding your current position and focusing on stage-appropriate activities, you can make your journey more predictable and efficient, transforming the chaotic struggle most startups experience into a systematic progression toward sustainable success.

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