I first heard about the basic concept of Model Market Fit from Christoph Janz Point Nine Capital. He wrote a post called Five Ways to Build a $100M Business . He then went on to suggest three more ways , but I’m going to focus on the first five because they represent the majority of $100M+ results.
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Credit: Christoph Janz and Point Nine Capital
On the Y-axis is the average annual revenue per customer macedonia mobile database you generate from your model. On the X-axis is the total number of customers you need to create a $100 million+ business. Most companies end up falling into one of the five areas Christoph named:
Elephant - Products that have 1,000 customers paying $100K+ per year. These are typically products built for enterprise customers like ServiceNow.
Moose - Products that have 10,000 customers paying you $10,000+ per year. These are typically products built for the mid-market like HubSpot.
Rabbits - Products that have 100,000 customers paying $1000 per year. These are usually products for small businesses like SurveyMonkey, Mailchimp, or Gusto. Products that target consumers in high-value moments are also here. Examples include companies in real estate, insurance, etc.
Mouse - A product that gets 1 million customers paying $100 per year. These are usually products for prosumers like Dropbox or subscription e-commerce companies like Ipsy or Dollar Shave Club.
Flies – Products that typically generate $10 per year by acquiring 10 million customers through advertising. Facebook, Snapchat, Buzzfeed, etc. live here.
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What we can do is draw a line underneath the chart. This is what I call the model market fit threshold.
If your business ends up being above this threshold, then you have model market fit. If you are below the threshold, then you don’t have model market fit.