Karan's ToM: PMF Edition

Over the past year, I’ve been sharing weekly “Friday Thoughts” internally with the team at Brex–  a series of reflections on what’s top of mind for me, from strategy and execution to prioritization and long-term vision. 2024 has been a year of ruthless prioritization, with a laser focus on execution, and our results are a testament to that. Yet, in the hustle of day-to-day operations, it’s easy to lose sight of the big picture: how we align our strategy and balance near-term goals with our long-term vision.

I’m excited to bring this internal series to the LinkedIn community, sharing insights into how we operate and think about the future. At Brex we’ve long held the belief that we’ll not only build Brex into a generational company but openly share our learnings for the benefit of other startups looking to build generational companies through our Building Brex blog. I hope these posts spark meaningful conversations and provide a window into our journey. Looking forward to hearing your thoughts as I share more!

Team,

We’ve had a phenomenal year of execution and the Q3 results speak for themselves but it is easy to lose sight of the big picture in the day to day hustle of Brex. I need to delve deeper into how and whether our strategy has evolved with Brex 3.0, why we’ve shifted our focus areas, and where we’re headed next. To kick off today’s topic, I want to challenge the foundational principle we’re often taught when building products and businesses: Product Market Fit (PMF). 

If you haven’t felt it yet, let me spell it out - PMF is dead.

The traditional notion of PMF, as coined by Andy Rachleff and popularized by VCs, assumes a static market eagerly awaiting the perfect product. The reality is that the “market” in product-market-fit is not static and hence, by definition, PMF is increasingly a moving target.

In today’s hyper-competitive market, with unparalleled development velocity, and in a world where customers can be hyper-targeted with personalized marketing, there is no static TAM to serve. In other words, what fits today might be as outdated as a flip phone tomorrow.

In our own Brex experience, we had an amazing PMF with corporate cards for startups in 2019 (0 to $100M revenue in 18 months!). And you all don’t need a refresher in Brex history to know how quickly the market got flooded with me-too corporate cards for our PMF definition to expand to include a rewards program, global coverage, expense management, a banking better-together, and so much more. That shift happened over ~3 years. 

Market shifts are happening in months, not years–with demands for modern solutions evolving rapidly. Take Brex Travel as an example. It’s no longer enough to simply book flights and hotels—companies now require a solution that unifies travel and expense management end-to-end, expect high quality and personalized support, want the ability to book group offsites and not just individual travel, and so much more. Brex travel had to rapidly innovate and break new ground to deliver just that - a complete T&E solution with unbiased global inventory, driving higher employee adoption by keeping travel in policy on budget while finance teams gain real-time visibility and control. This level of innovation has become the new standard.

PMF = path to profitability

In business terms, PMF means:

You’ve built a solution—whether a product or service—that solves a real problem or fulfills a need people genuinely care about and are willing to pay for. It’s supported by a business model grounded in a realistically sized, accessible market that can sustain the costs of running your business.

If any of these statements ceases to be true, your product falls out of PMF. PMF matters because aligning value to customers who need or want your solution enough to pay for it is the only way to build a revenue positive business. Hence, PMF is still an important concept when thinking about growth or scaling a business but its implications on product are more profound and don’t get enough attention.

Perpetual Market Flux - the new PMF?

The new PMF isn't a destination; it's a journey. It's less about finding the perfect fit and more about mastering the art of continuous adaptation. Think of it as product-market parkour – constantly adjusting, pivoting, and leaping to keep up with the ever-shifting terrain of customer needs and market dynamics.

This shift calls for a complete reimagining of product strategy and roadmaps. The era of meticulously planned five-year strategies and rigid two-year roadmaps is over. We’ve entered the age of "strategic agility," where roadmaps function more like a GPS, recalibrating constantly to adapt to new information.

If you've wondered why the Brex leadership team has been adjusting priorities every quarter and reassessing investments every six months, this is why. To be clear, this doesn’t mean we’re endorsing erratic starts and stops. It’s about finding ways to continuously compound what we’ve built while staying nimble and adaptable.

Talking to my peers building AI startups, they don’t even have the luxury of waiting for a quarter. Their roadmap, and ironically, even strategy, has to be re-evaluated every few weeks or every time OpenAI or Anthropic tweets a new announcement 🙂. At Brex, given our market landscape, we have the luxury of a more enduring strategy than our friends in AI startups. Still, we have to remain very nimble in how we invest, reinvest, and rebalance our portfolio (i.e. roadmap).

Speed is Moat

Similar to the adage, “quality is a feature,” in today’s environment, I want to reiterate the fundamental assertion that Pedro outlined in the Brex 3.0 memo - speed is our moat. Moving fast is as important as building the best product in a highly competitive market. The only way to keep building fast for a long time is to build it on a solid foundation to compound what has already been built. So, as we enter the scale phase of Brex 3.0, we need to get disciplined about compounding but with the added responsibility of being flexible on what we execute on in any given quarter. Our next planning cycle is aimed at tackling just that.

So, strap in, hold on tight, and get ready to ride the wave of constant change. After all, in the words of the great philosopher Heraclitus (or was it Ferris Bueller?), "Life moves pretty fast. If you don't stop and look around once in a while, you could miss it."

The king of static PMF is dead. Long live the dynamic, ever-evolving PMF.