Using the lean startup model for product-market fit


The lean startup model is a great way to understand, explore, and ultimately achieve product-market fit for your startup. Let's go over what, exactly, it is.
Familiar with product-market fit? Now it’s time to go get it. 

Introducing: the lean startup model. It’s all about focusing on your customer, iterating until you get it right, and improving over time. In the fast-moving world of business, there may be no such thing as perfect, but there is such a thing as developing businesses and products that have the best chance at success through an approach that prioritizes people, data, and experimentation. 

In this guide, we will cover:
  • The difference between the lean model vs. traditional business models
  • Getting product market fit—the lean way
  • Defining, developing, and testing your MVP

The lean startup model vs. traditional business methodologies 

The lean startup model is a method that supports the process in getting to product-market fit. It differs from traditional business methodologies, which primarily focus on extensive research ito build a perfect product prior to launch. 

The lean startup model strips this process back to a continuous and ongoing customer feedback loop, building an MVP and getting it to market as soon as possible, then iterating from there. In fact, many very large companies today started small and benefited from the lean startup model as it allowed them to “move fast and break things," a motto coined by Mark Zuckerberg to describe Facebook’s approach during its early stages.

Both the lean startup model and traditional business methodologies involve a degree of planning and research, but the lean startup model is ultimately designed to better suit the pace of today’s market. It helps with building innovative and new business models that have little previous precedent and where extensive research may not provide a full view of how your product may address your customers’ problems. Instead, you’ll need to conduct research to identify hypotheses about what features may matter to your customers, then get out there and test products and ideas to see how they resonate, using real-time feedback and data to improve them. 

So let’s break down the steps.

Steps to getting to product-market fit, the lean way

Determine your target market

The key to successful product-market fit starts with identifying your market. At this stage, you’ll want to hone in on a market with a specific problem. Most likely you’ll be looking for an existing market rather than creating a brand new market, but the latter can happen when new technologies enable new solutions that open up entirely new markets.

Tip: read our articles on evaluating the market and honing in on your customer, as well as how to discover the size of your TAM (total addressable market) since you’ll want to make sure that the market you choose is large enough.

Identify their needs

Once you’ve honed in on your target market and the customers that exist within that market, you should conduct research to learn more about their needs and what about the current solutions on the market aren’t serving them. If at this stage no unmet needs are identified, then you may need to go back to the drawing board to find a different target market. The stronger the need, the easier it is to get to product-market fit.

Tip: read our article on conducting customer research.

Define value proposition

Now that you understand your target market’s unmet needs, it’s time to bring your product into the equation to answer this question: how do you plan on serving those needs with your product? You can think of this in terms of identifying your competitive advantage, and this will start to inform your product and overall business strategy.

At this point, you can put together what you’ve learned from the first three steps to create a lean startup canvas, which is like a business plan but on one page. And there you have it, everything you need to start building.

Define, develop, test your MVP

Now we’re going to go from product strategy to building by defining, developing, and very importantly, testing your Minimum Viable Product (MVP). This is, of course, the most challenging part of the process, and while it may not take long to build an MVP (Product Hunt was built in 20 minutes, its very first iteration a simple email newsletter), it can sometimes take years of testing various iterations of a MVP to get to product-market fit (Netflix took 18 months starting from its first version, a pay-per-rent model through mail). We go through the steps of building an MVP in this article, but below is an overview to get you acquainted with the process.

Step one: define

It’s important to define your MVP because you’ll want to build a prototype that has only the necessary features in order to provide the solution that your customer needs. To do that, you’ll need to conduct product research. 

Step two: develop

You may be wondering if you need a technical cofounder or a developer to build your MVP. In most cases, you don’t. And in most cases, you shouldn’t even spend that much time on your MVP either. An MVP could manifest in various forms:
  • A no-code product such as a website built with Webflow, or even a newsletter or Instagram account
  • A design prototype via Sketch or Figma
  • A version of the product with a minimal feature set
  • Some people even count a landing page as a MVP, but the verdict on that is up in the air since a landing page only measures potential demand and not product experience

When deciding what approach to take, consider your skills as well as the norms and standards that your customers and market may be used to already. For example, Thingtesting, now a VC-funded startup that focuses on brand discovery, initially started as an Instagram account. Its founder, Jenny Gyllander identified that the type of person interested in consumer products was mostly hanging out there already. She focused on the problem (direct-to-consumer product discovery with an unbiased, unsponsored perspective) rather than the solution, and now the solution has evolved to include the much more feature-heavy Thingtesting platform.

Step three: test

Now it’s time to test. Make sure to test with people in your desired target market, and listen not just to what they’re saying but what they do too as they use your product. During the process, you’ll need to be gathering customer feedback through both quantitative data (such as website analytics) as well as qualitative data (such as user testing and interviews). Maintaining non-bias is very important at this stage to avoid influencing tests and making sure you’re getting real and valid feedback. The goal isn’t to confirm your assumptions, it’s to build the best thing for your customers using the feedback you receive. 

Repeat; aka, iterate

Also known as iterate, key to the lean startup model is constant iteration, even when you’ve found product-market fit. Testing isn’t complete when your test is done. You have to test your MVP again and again, making small changes and sometimes even major pivots as you go. When you get to a point where negative feedback is minimal or absent, congratulations, you may have achieved product-market fit! (Just make sure it’s not because you’ve exhausted your customers and they’ve moved on.)

Airbnb, as evident in their name, started as a way for its founders to rent extra space with air mattresses in their living rooms with the added perk of breakfast, kind of like a bed and breakfast lite. Then, they tried to broaden their positioning by becoming a networking service during conferences, which got them to about $200 per week in revenue—not quite the multi-billion dollar behemoth we know of today. It wasn’t until they allowed users to list on Craigslist too that they were able to tap into a much larger user base and existing market demand. They hadn’t quite hit their target market and had to keep going and tweaking until they got it. Product-market fit, unlocked. It’s not as straightforward as building a MVP and launching; iteration can mean many mini launches and big ones, too, throughout the lifespan of a business. 

Whether they’re small changes (like Airbnb’s logo update) or pivots (like when they pivoted from a technology-centric company to a lifestyle-centric company through brand positioning and product features), businesses should continue to iterate even well after they’ve established initial product-market fit. 

While it's not the only way to determine product-market fit, the lean startup model is a solid, proven methodology that lets you "move fast and break things." By now, you should have a good understanding of:
  • What product-market fit is, and how the lean model achieves it
  • How the lean method differs from traditional methods
  • What you need to determine product-market fit the lean way
  • How to develop and then iterate on your MVP
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