Problem-Market Fit

Almost all advice for early stage startup companies focuses on product-market fit, which is the point at which it’s clear that your product is meeting a market need in a reproducible way and your business can scale.

While I agree with that advice, it takes quite a while before you can even determine if you have product-market fit. You need to identify the market, define the problem, build a product and test it with customers. After that process, it’s unlikely you have product-market fit (it’s very hard to attain) so you repeat the process over and over again until you find it or give up.

There is a much earlier point in the company building process where you can save yourself a lot of time by being more critical, which I call Problem-Market Fit. All successful companies are started to solve a problem (see Are You Sure You Are Solving a Problem?) but few founders spend time validating that it is even possible to build a successful company on the problem they choose to solve.

After you choose your problem, make sure you have Problem-Market Fit by applying the following criteria:

  • Do customers consider it one of the top 3 problems they have?
  • Would customers immediately adopt a solution if you provided it to them right now?
  • If you solve the problem, do you have ways to distribute your solution to the customers?

I am always shocked at how many companies are started, and how much effort invested, to solve problems where the answer to at least one of these questions is ‘no’. If your problem isn’t one of the top 3 problems a customer has, you will have trouble getting their attention since they will be focused on those other problems. If they won’t adopt it immediately, the problem likely isn’t acute enough to warrant a brand new solution. If you can’t distribute your solution, then it doesn’t matter how great your solution solves the problem because no one will ever see it.

This will require you to speak with many, many customers and do in depth market research. However, days spent in doing this will save you months or years of your time in the future!

If you can’t answer ‘yes’ to all of those questions, you don’t have Problem-Market Fit and you are going to have a tough (if not impossible) road ahead. Before building a product, ensure you have Problem-Market Fit or else it won’t matter how many times you iterate.

My new company, Outlier, helps you understand your business by automatically digging through your data and finding important opportunities and problems. Don’t spend time scanning dashboards and spreadsheets, let Outlier find the insights for you. 


5 thoughts on “Problem-Market Fit

  1. Tomiwa Olajide

    Hi Sean, while I agree with you in principle, the evidence that abounds all around us weaken your argument. Over and over, we keep seeing how visionaries imagine a future and work hard to create it. The iPhone, or Facebook, or Amazon, and even the Computer were all products and services people never thought they needed. If Zuckerberg had asked people what they thought about a website where you told/showed your friends what you are doing, what would their answers have been? Most defining solutions go against the grain at first, until they grow to become the standard… Electricity took roughly 60 years to reach the entire US.

    As Peter Thiel opined, the future is a series of events that haven’t happened yet. How do you then check or validate problems people don’t even know they have? Yes, take calculated risks. Understand the problem, but also be courageous enough to believe in your ideas, even if you are the first person to do so.

    1. Sean Post author

      Social was a problem Zuckerberg was trying to solve, but Facebook wasn’t his first one – it just happens to be the one you remember because it succeeded. Your examples are products that were designed to solve a problem and you are right, people are horrible at imagining products to solve their problems.

      However, they are great at telling you about problems they have or acknowledging them if they do. In 2006 everyone in the mobile industry knew we needed better phones. Nokia was rolling out bigger and bigger phones, while Blackberry was winning with keyboards but the user experience was universally poor. We wanted to do more with our phones, but the screen size and inputs were limiting. The iPhone’s innovation was to solve that problem that was widely acknowledged in a unique and innovative way.

      There is no such thing as a problem people don’t know they have. If you are solving a problem people really don’t have, they aren’t going to use it. What you can do is solve a problem they have that they didn’t even know could be solved OR solve a problem they have in a new and unique way.

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