Investors and Superhuman Mail founder explain how to spot product-market fit
At TechCrunch Disrupt, venture capital investors and the founder of email app Superhuman Mail discussed how startups can tell whether their product truly sells in the AI era. They warned about inflated revenue figures and advised tracking customer engagement and retention.
Startups are finding it harder to tell whether their product truly fits the market, meaning it sells well. Two venture capital investors and the founder of the email app Superhuman Mail discussed the issue last week at the TechCrunch Disrupt technology conference. The panel included Anu Bharadwaj of the investment firm Iconiq, Rajeev Dham of Sapphire Ventures and Rahul Vohra, who founded Superhuman Mail.
In the AI era, startups are growing at record speed, but not all customers stay loyal and products can be copied more easily than before. Bharadwaj said pilots are easy to win, while moving from pilot to production is the hard part.
Red flags
She noted that many founders cite revenue metrics to investors without saying which revenue they mean. The abbreviation ARR can stand for annual recurring revenue or for annualized run rate. Chatter on X has recently focused on AI founders inflating the figure, for example by counting pilot customers who may use a product for only a couple of months. She named further red flags: a few customers making up much of the revenue, or customers being able to switch easily to a vendor with a better price.
Vohra advised tracking customer engagement and dollar retention, especially for consumer products. Besides ARR, Superhuman used its own internal metric, "delighted ARR", which counted revenue only from highly engaged customers.
Green flags
Vohra suggested asking customers what value they see in the product and how they would feel if they could no longer use it. If the share of positive answers is 15% or below, he said, a complete pivot may be worth considering, while at 20% a team can optimize its way up to 40%.
Dham stressed that having a vision is not the same as having a good business, and said he values founders who have made many pivots. He added that even companies with a billion in revenue keep re-earning their product-market fit.
