A B C D E F H I L M O P S T

Product-Market Fit

/ˈprɑː.dʌkt ˈmɑːr.kɪt fɪt/

Product-market fit means: you have collected evidence that your solution solves your customers' problem(s) in a way that they prefer over current alternative solutions; you have proof that they are willing to pay for it; and your service demonstrably gains its first traction in the market.

In a transition phase up to product-market fit (PMF) most startups do not yet have a sustainable business model. Product-market fit therefore usually gets tested with a series of experiments that fake a background operating model which does not yet exist. A popular way of doing so is building a series of experiments up to a Concierge MVP and running a ‘Sean Ellis Test’. Once enough learning and evidence is gathered that the value proposition addresses not only desirability but also the first viability criteria, a team can move on to validate whether their solution can really be delivered in a profitable manner — in other words, if the startup has also reached ‘business model fit’.

One small word of caution: what often happens is that startups extensively test their MVP(s) with early adopters and visionary users but not enough with mainstream customers . This might lead to what Frank Mattes & Ralph-Christian Ohr call ‘product-pioneer fit’, a false positive for PMF if you will.

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