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The difference between product/market fit and idea validation

Updated: Apr 9

Recently, Product-Market Fit (PMF) has become a buzzword in the startup world. However, most people tend to use it as a legendary phase in the journey of a startup. This definition is far from the reality. In fact, Product-Market Fit (PMF) is an ever-lasting search for building a product that truly meets the needs of the target market. A startup may find PMF in a certain market while it struggles in some other market.


Product-Market Fit (PMF) is often mistaken with another concept; which is idea validation. Proving a problem hypothesis and then building an early solution to meet the needs of a small early adopter customer segment is the kind of roadmap for startup founders to validate their ideas. It is the first step towards PMF.

Steve Blank (the author of the famous book The Four Steps To The Epiphany) defines the early days of a startup as the “search” phase. Then comes the “execute” phase.

A startup enters the search phase with idea validation and at the end of the “execute” phase, it (hopefully!) reaches product-market fit (PMF) in a few years. If you are asking yourself "What is the difference between product/market fit and idea validation?", you will find your answer, here.











The Search Phase: How To Create Customer Value?


In the search phase, you (as the founding team) are trying to search for a problem, an early adopter customer segment, and a minimum viable solution that will solve the problem of those customers.


We (as the coaches of 7 Fit Framework) define this search phase with 3 Fits such as;



  • Customer-Problem Fit: “Idea Validationusually goes here. You work on a problem hypothesis statement, define your early customers, speak with them to understand their problems, and analyze those interviews to reveal which problem poses a market opportunity. If you happen to disprove your hypothesis here, you may be lucky enough to find a better idea.

  • Problem-Solution Fit: This is the phase where you try to build a feasible solution to the problem you discovered. This solution is intended to be something you can create with your resources. Minimum Viable Product (MVP) is the popular term for the solution you build at this stage. An MVP is intended to include minimal features that display your value proposition.

  • Customer-Solution Fit: This is the phase you test your MVP with your early adopters and see if they are willing to use it. You should be open to experimenting with a few MVP versions and iterating to find a usable solution.


the phases of the startup curve

The Execute Phase: How To Create Business Value?


In the execute phase, a startup shall be ready to search for a viable, scalable and repeatable business model.


This is the phase where we (as the coaches of 7 Fit Framework) define with 4 Fits such as;


Product-Channel Fit: This is the phase where you discover your distribution channels and apply tests to see which one works the best. If a substantial percent of your growth comes from a single channel, you understand that you reached product-channel fit.



Free Infographic: How to validate your startup in 6 weeks



Channel-Model Fit: Not every business model works well in every channel. Especially the pricing model requires many iterations before you can make sure that it works.


Model-Market Fit: The truth of this phase is; your market influences your model. # of customers within your market and what percentage of these customers you have captured influence to what extent you will reach model-market fit. Christoph Janz of Point Nine Capital has an inspirational way of defining the market; The Five Ways To Build A $100M Business. Brian Balfour [previous VP of Growth HubSpot (company)] successfully displays model-market fit as being in the area on top of the ARPU/# of customers graph below.



Model-market fit threshold


Product-Market Fit: Product-market fit is the ultimate proof that a business has a viable business model and is ready to SCALE. When you start experiencing double-digit revenue growth numbers, you know that you reached PMF.


If you are interested in the practice, remember to check resources on the idea validation methods.



 

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Originally posted on Quora.com as a response to this question.

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