Sean Ellis' 40% Rule: Is Your Product Ready to Scale?
When Sarah launched her productivity app, she was convinced she had built something revolutionary.
The early adopters seemed enthusiastic, investors were intrigued, and her team was growing.
But six months in, growth had plateaued, and she couldn’t figure out why.
“I thought we had product-market fit,” “But now I’m not so sure.”
Sarah’s situation is all too common.
Many founders mistake early excitement for product-market fit, only to discover they’ve built something people like but don’t love enough to stick with or recommend.
That’s where the Sean Ellis 40% rule comes in.
Sarah was a fictional character, but similar happened with KISSmetrics, Zoom, Slack, and several other startups.
Many founders believe product-market fit is achieved when hitting certain user numbers, revenue targets, or growth rates.
You might have heard some variations of these:
“You’ll know it when you see it”
“It’s all about user numbers”
“Listen to what users say they want”
“Product-market fit is binary”
“You need to pivot until you find it”
Ellis brings a reality-check perspective that contrasts with the often over-optimistic startup ecosystem.
“Most founders believe they’re closer to product-market fit than they actually are.”
They build solutions without deeply understanding the underlying problem.
This leads to products that might be technically impressive but don’t address genuine user needs.
According to Sean Ellis, founders should focus on specific goals when working toward product-market fit.
– Find Your Must-Have Use Case
– Identify Your Core User Segment
– Achieve the 40% Threshold
What’s this 40% rule?
Back in the late 2000s, Sean Ellis was helping startups like Dropbox, LogMeIn, and Eventbrite achieve explosive growth.
After working with dozens of companies, he noticed something interesting:
There was a clear dividing line between companies that could scale successfully and those that couldn’t.
The difference came down to one simple question:
“How would you feel if you could no longer use ?”
And specifically, the percentage of users who answered: “Very disappointed.”
Ellis discovered that companies where at least 40% of users would be “very disappointed” without their product had found true product-market fit.
Those below this threshold typically struggled when trying to scale.
The genius of this approach lies in its simplicity and predictive power.
The Complete Product-Market Fit Survey
While the “very disappointed” question is the cornerstone, a complete product-market fit survey should include these additional questions:
How would you feel if you could no longer use ?
- Very disappointed
- Somewhat disappointed
- Not disappointed
- N/A – I no longer use the product
What type of people do you think would most benefit from ?
What is the main benefit you receive from ?
How can we improve for you?
Implementing the Survey: Practical Steps
Target the right users:
Focus on people who have experienced your product’s core value, typically those who have used it several times or for at least two weeks.
Aim for statistical significance:
Try to get at least 40 responses, though more is better.
Segment your results:
Break down responses by user type, acquisition channel, and usage patterns.
Act on the feedback:
The qualitative answers about benefits and potential improvements are gold for refining your product.
When You Don’t Hit 40%: What’s Next?
If you’re below the 40% threshold, don’t despair. This is valuable information that can help you redirect your efforts before burning through resources on premature scaling.
You can use the FOCUS framework:
F: Find Your Best Segment
O: Optimize for Core Value
C: Clarify Your Messaging
U: Understand the Competition
S: Systematize Feedback Loops
Here’s a simple visualization to help you:
- Below 20%: Fundamental reconsideration of the product may be needed
- 20-40%: Getting closer, continue focused iteration
- 40-60%: Ready to begin scaling efforts
- 60%+: Exceptional product-market fit, scaling should be highly efficient
What matters isn’t where you start, but how quickly you can learn and adapt until you create something indispensable to your users.
When 40% say they’d be “very disappointed” without you, that’s when the real journey begins.