[Response]

Hi Peter Chui,

The reason I wrote this article is because different types of PMF are usually mixed together. The standard definition is more for VCs and entrepreneurs, to define the beginning of the hockey stick curve.

Then, employees take that and think: “Wow, this company has PMF, I should join!” only to leave 5 years later, no liquidity, not being able to exercise its stock because of the double cost of exercising and paying taxes.

That means that what’s a meaningful PMF for entrepreneurs and VCs is meaningless for employees.

Employees take PMF as a proxy for “this is a sure bet.” As such, the PMF for them must be adapted. That’s why, as you say, it’s much closer to liquidity—yet far enough that there’s still a lot of upside.

Another way to see this is defining PFM as the optimal risk-reward point to join. For a VC, PMF is just at the beginning of the hockey stick. For an employee, it’s not there. That’s still too risky and far away from liquidity. A much better place for them is at the point in hypergrowth where the company is still small but starved for resources—hence generous in stock—yet pretty sure to have PMF.