''' I sold my first company, MovieLaLa, to Gfycat. My second, RemoteTeam, was acquired by Gusto. I’ve been lucky enough to be on both sides of the table, as a founder and now as an angel investor in over 200 companies, including some names you might recognize like Anthropic, OpenAI, and Scale AI. I’ve seen a lot of startups win, and a lot more fail. And I can tell you, the single biggest reason for failure isn’t running out of money. It’s chasing a solution nobody wants.
Finding product-market fit is the only thing that matters for a startup. It’s the difference between pushing a boulder uphill and riding a rocket ship. But in the world of AI, where the ground shifts under your feet every six months, what does product-market fit even look like? The old rules don’t always apply. The metrics that worked for SaaS don’t tell the whole story for AI.
I’ve spent the last year talking to founders, VCs, and heads of product at the fastest-growing AI companies. I’ve looked at the data from my own portfolio. And I’ve distilled it down to eight signs that your AI product is really hitting the mark. If you see these, you’re on the right track. If you don’t, it’s time to go back to the drawing board.
1. Your Growth Is Organic and Accelerating
This is the classic sign, but with an AI twist. It’s not just about getting new users. It’s about people actively seeking you out because they’ve heard your product is the best. They’re not coming from a paid ad. They’re coming from a tweet, a blog post, or a friend who said, “You have to try this.”
When we were building RemoteTeam, we knew we had something when our sign-ups started to spike without any marketing spend. It was all word-of-mouth. That’s the holy grail. For AI products, this is even more critical. The space is so noisy that paid acquisition is a tough game to win. You need a product that’s so good, it markets itself.
Look at your user acquisition channels. If the majority of your new users are coming from organic search, social media, and direct traffic, that’s a great sign. If you’re still heavily reliant on paid ads, you’re not there yet.
2. People Are Paying, and They’re Sticking Around
Free users are great for vanity metrics. But paying customers are the only thing that will build a real business. In AI, it’s easy to get a lot of free users who are just playing around with the latest cool tech. The real test is whether they’re willing to pull out their credit card.
And it’s not just about getting them to pay once. It’s about getting them to stick around. Churn is the silent killer of startups. If you’re losing more than 5% of your customers every month, you have a leaky bucket. It doesn’t matter how many new customers you pour in, you’ll never fill it up.
I look for a net revenue retention of over 120%. That means that even if you don’t add any new customers, your revenue is still growing by 20% a year from your existing customers. They’re not just staying, they’re upgrading and using your product more. That’s a powerful sign of product-market fit.
3. You Have a Repeatable Sales Process
If you’re selling to businesses, you need a sales process that’s as repeatable as a factory assembly line. You need to know who your ideal customer is, where to find them, and what to say to them to get them to buy.
For a while at RemoteTeam, our sales were all over the place. We were talking to anyone and everyone. It was only when we focused on a specific niche – remote-first tech companies with 50-200 employees – that we started to see real traction. We built a playbook. We knew exactly what their pain points were, and how our product solved them.
If you can’t describe your ideal customer in a single sentence, you don’t have a repeatable sales process. If every sale feels like a custom project, you’re not there yet. You need to be able to hand a new salesperson a playbook and have them be productive within a few weeks.
4. Users Would Be Heartbroken If You Disappeared
This is the “Superhuman test,” named after the email client that famously asked its users, “How would you feel if you could no longer use Superhuman?” If more than 40% of your users say they would be “very disappointed,” you have product-market fit.
This is a great way to cut through the noise. People might say they like your product. They might even pay for it. But would they be truly lost without it? That’s the real test of value.
We did this at RemoteTeam, and the results were eye-opening. We found a core group of users who were deeply passionate about the product. They were our champions. We focused on building for them, and it made all the difference.
5. Users Are Hacking Your Product to Do More
This is one of my favorite signs. It’s when your users are so engaged with your product that they start using it in ways you never intended. They’re pushing the boundaries of what’s possible. They’re building their own tools and integrations on top of your platform.
I saw this with one of my portfolio companies, a text-to-video platform. They built it for marketers to create social media videos. But then they saw users making music videos, short films, and even wedding invitations. The users were showing them what the product wanted to be.
This is a goldmine of product ideas. Your most engaged users are telling you exactly what to build next. All you have to do is listen.
6. You’re Getting Inbound Interest from Investors and Acquirers
When you’re heads down building your product, it’s easy to forget that people are watching. But if you’re getting real traction, the right people will notice. VCs will start emailing you. Competitors will start sniffing around.
This was a big one for us at MovieLaLa. We started getting calls from some of the biggest names in entertainment. They saw what we were building and they wanted in. That’s when we knew we were onto something big.
Now, you shouldn’t build your company to be acquired. But inbound interest is a strong signal that you’ve created something of value. It’s external validation from the market that you’re on the right track.
7. Your Team Is Overwhelmed (in a Good Way)
This might sound like a bad thing, but it’s actually a great sign. It means you have more demand than you can handle. Your support team is swamped with tickets. Your engineers are working around the clock to keep the servers up. You’re hiring as fast as you can.
This is what hypergrowth feels like. It’s chaotic. It’s stressful. But it’s also exhilarating. It’s the feeling of being pulled forward by the market, rather than pushing your product onto it.
If your team is bored, you have a problem. If they’re constantly fighting fires, you’re on the right track. The key is to make sure you’re scaling your team and your infrastructure to keep up with the demand.
8. You Can’t Keep Up with Feature Requests
This is another sign that your users are deeply engaged. They’re not just using your product, they’re thinking about how it could be better. They’re sending you a constant stream of feature requests, bug reports, and ideas.
This can be overwhelming. But it’s a gift. Your users are giving you a roadmap for free. They’re telling you exactly what they want and what they’re willing to pay for.
At RemoteTeam, we had a public Trello board where users could submit and vote on feature requests. It was one of the best things we ever did. It helped us prioritize what to build next, and it made our users feel like they were part of the team.
The Bottom Line
Finding product-market fit is a journey, not a destination. It’s a constant process of listening to your users, iterating on your product, and adapting to the market. But if you see these eight signs, you can be confident that you’re on the right path. You’ve created something that people want, and you’re on your way to building a great company.
Now, go build. '''
Frequently Asked Questions
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.