Ravikumar: Usage and gross retention define product-market fit in AI
Vignesh Ravikumar · Why "SaaS Apocalypse" is the Best Filter for Top 1% of Founders | Vignesh Ravikumar, Sierra Ventures · Apr 30, 2026 · at 29:28
Sierra Ventures partner Vignesh Ravikumar explains how evaluating product-market fit in AI startups differs from traditional SaaS ARR and productivity metrics.
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“I think in the AI world, to me, the leading indicator of product market fit is actually usage. And can you actually predict number of tokens, what the user is doing on the product? Are they consistently using it every day? Are they consistently using it every week? Are they using up all the credits that you're giving them? I think that is an underrated metric that we don't spend a ton of time looking at and partially because a lot of these companies are early. And then the second metric I think about is gross retention. Obviously the net retention is going to be there if it works because AI is so good. I think people want to consume as much of it as possible, but you really got to look at that gross retention number and the usage and metrics. And I think that's what's going to define PMF in this world.”
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