the obsession with “recurring revenue” has gone too far. most businesses have repeat purchasers, and people cancel SaaS subscriptions.
yes, recurring revenue is great to have, but is it really worth such a huge valuation premium over “regular revenue”?
fundamental issue remains: if users love the product, they will keep buying. if not, they will eventually stop.
— Sam Altman (@sama) November 7, 2014
Sam’s quote above got me thinking a lot about product. I believe that the primary reason we have been successful as a business is that we achieved product-market fit quickly in a space that is growing and hungry for our software. While our business model has changed over the years, the fundamental fact remains that we have great software that people love, and it brings them great value beyond alternative approaches.
As we approach an open source version of our product, Sam’s statement for us changes from “buying” to “using and buying correlated support and services,” but the concept is the same of delivering something that users love and want to keep using ongoingly.
David Cummings posted his simple recipe for finding successful product-market fit as: “Product-market fit is achieved when five new customers are immediately happy and don’t find any bugs.” I like that concise formula for thinking about product-market fit.
Customers loving a product is of primary importance to a startup. Tomorrow I will write a little about the importance of a good business model.
What are your thoughts about the importance of customers loving a product?