September 30, 2023


Learn about the product-market fit concept as well as why it is so important in the product world.

Product-market fit (PMF) beautifully encapsulates the concept of creating an exceptional product. It is a critical cornerstone of the Lean Startup methodology, and in this blog we will provide a roadmap to attaining it.

While many experts have delved into PMF, interpretations vary. Using real-life cases helps elucidate this concept. Throughout this blog, I'll highlight various products that either hit the mark or missed it in terms of achieving Product-market fit. But first, let's define it.

Decoding Product-Market Fit

Marc Andreessen popularized the term product-market fit in his impactful blog post, "The only thing that matters." He defines PMF as having a product that can address a sizable market effectively.

We can explain PMF as the development of a product that offers immense value to customers, fulfilling their needs better than the existing alternatives.

While some extend the definition of PMF to include revenue models or customer acquisition strategies, equating PMF to profitability might overshadow its core essence. In this piece, we'll focus primarily on the fundamental definition of PMF.

For businesses, there's a clear line between value creation and value capture. While critical aspects like the business model, marketing, and pricing are vital for success and warrant individual discussions, our primary focus here is to decipher PMF and provide a strategy to achieve it.

Introducing the Product-Market Fit Pyramid

In his book "The Lean Playbook" Dan Olson define a structured approach. I will use it in this blog post to describe product-market fit.

Enter the Product-Market Fit Pyramid. This model breaks down PMF into five core components, representing them in a pyramid. The product occupies the top three layers, while the market forms the base two layers.
Product-market fit diagram
The Market’s Role (Bottom part of pyramid)

The market, essentially, is a pool of potential and existing customers with specific or related needs. Let's take the U.S. tax preparation scenario. All U.S. citizens needing to file taxes represent this market. Markets can be evaluated based on their customer count or the revenue they generate.

Different market segments choose varied solutions. In our tax example, some might opt for manual filing, some for professional services like H&R Block, and others might use software like TurboTax.

This zone also refers as Problem zone, because all market it united with one common problem - the need of filling taxes, that can be very confusing, especially in countries like US or Canada (in many countries people don't fill any taxes and everything is done by employers).

Understanding Your Product (Upper part of pyramid)

A product aims to cater to specific customer needs, and this applies to tangible goods and intangible services alike. In today's digital age, the boundary between products and services has blurred, as seen in Software as a Service (SaaS) offerings.

For software, the underlying code is intangible. Customers interact with its user experience (UX), the pinnacle of the Product-Market Fit Pyramid. A product's UX, combined with its features aiming to fulfill user needs, forms its core strategy or value proposition.

Another common definition of this zone is solution zone, because our application is a possible solution of user problem.

Understanding Product-Market Fit (Middle of pyramid)

Achieving Product-Market Fit is crucial for aligning a product with its target market, ensuring that the product addresses customer needs and offers value they're willing to pay for. Essentially, it bridges the gap between the foundation and the upper level of the business pyramid.

Achieving the Ideal Product-Market Fit

To achieve product-market fit, it's not enough to merely have a detailed model of what it looks like. Having worked with numerous teams on various products using the Product-Market Fit Pyramid, Dan Olson crafted an easy-to-follow, iterative method for this. This method, titled "The Lean Product Process", with the following steps

The Lean Product Process involves:

  • Pinpointing your target audience.
  • Discovering the needs of customers that aren’t being met.
  • Crafting your unique selling proposition.
  • Outlining the most basic, yet functional, set of features – the MVP (Minimum Viable Product).
  • Developing a prototype of your MVP.
  • Putting your MVP to the test with real customers.

We will follow his steps in this manual too, summarizing key concepts and I will provide additional description of different steps that should be done on a way.

The MVP is a core concept, the most rudimentary version of your product that still delivers value. The principle is to build only what's essential to verify your theories with the target audience, avoiding unnecessary complexities.

The Lean Product Process isn't just about starting from scratch. It can also be applied to enhance an existing product. Rather than working on an entire product, sometimes the focus can be on an individual feature. In these scenarios, think of it as applying to the "minimum viable feature".

Moreover, not all products need every step. While some steps are crucial for new products, once you've determined your target audience, discovered their needs, and set your unique selling proposition, you might not need to reevaluate them frequently. However, refining features and retesting with users should be an ongoing cycle.

Taking inspiration from Lean manufacturing principles, the idea is to minimize rework. While some iterations are inevitable, the Lean Product Process strives to help you achieve product-market fit in the shortest time possible by preventing unnecessary revisions.

Finding Product-market fit is an iterative process, achieving which is an ultimate goal of any product manager.


Visualizing PMF through this model, it's the harmony between your product (the pyramid's top) and the market (the pyramid's base). Your target audience's response determines your product's resonance with their needs. To truly achieve PMF, your offering must fulfill untapped needs, surpassing rival products in the market.

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