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Sequoia Capital's Framework to Find Out If a Startup Has Achieved Product-Market Fit (PMF) 👇 The First is "Retention Curve" - "The retention curve is what percentage of your users keep coming back over some time while using your product/service." Essentially, there are 3 kinds of retention curves, and you should plot this curve by day, week, or month, once you launch your product. 1. Declining Curve (dark grey line), let's say you’ve launched a consumer internet app on day 0, and every week your retention rate declines by 10%, which essentially means that by the end of 3rd month, all your initial users would have churned, then that's a declining curve, which indicates that you don’t have a product-market fit. 2. Flattening Curve (orange line) is actually good, although it kind of varies depending upon the category (Health-Tech, EdTech, etc.,) but generically speaking if the retention curve flattens between 20%-40% that could be quite good. 3. Finally the best one is the Smiling Retention Curve (green line), which means that retention drops but then as time goes on you keep reactivating users, which indicates that you're getting close to your product-market fit. Another question that founder should think is - 2. Do Customers Love Product? Net Promoter Score (NPS) is a metric that organizations use to measure customer loyalty toward their brand, product or service. NPS works by asking your customers a single question: "How likely are you to recommend our products/services to others?" NPS = % Promoters (score 9-10) - % Detractors (score 0-6) If the magic score is = 70% or more, then you have an amazing product-market fit. But if the number declines to 40% or below, then you don’t have it. It's that simple! What do you think of these two methods? Check out my free newsletter for more insights: https://lnkd.in/dTzRN9HK . #startup #fundraising #venturecapital #funding #fundraising #founders #founderjourney #entrepreneurship #entrepreneur #founderstories #startuptips #sharktankindia #siliconvalley #startups #vc #vcfund #vcfunding #funding #startups #pmf #product #sequoiacapital

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Sahil S

Posts about Startups, Venture Capital, and AI News | Building - Minimal Ventures & Venture Crew | Join the Free Community of 86,000+ Founders & Investors 👇

6mo

You can watch a video by Mr. Rajan Anandan, Managing Director at Sequoia Capital, where he talks about PMF: https://www.youtube.com/watch?v=WoQkLis1pGM

Sahil S

Posts about Startups, Venture Capital, and AI News | Building - Minimal Ventures & Venture Crew | Join the Free Community of 86,000+ Founders & Investors 👇

6mo
Suryansh Jaiswal

Co-founder at Zyler AI | Building AI agents for Marketing Analytics | Ex-Head of Product

6mo

Sahil S. High retention and NPS can be misleading if achieved through unsustainable pricing. True PMF emerges when users stick around after prices align with business viability. Until then, we're potentially just subsidizing user satisfaction.

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John Mathew

Founder of Team Counsel | Legal Consultant for Early-Stage Startups & VCs | 10+ Years Experience in Corporate, M&A, PE, & VC

6mo

Finding a product-market fit is the first step to scale your vision, and this is absolutely what we need. Sahil S.

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