Thanks to Eric Ries, Steve Blank and the whole lean startup movement, increasing numbers of founders and investors are more aware of the need for validating ASAP that a new business has a "Product - Market Fit".
Today, thanks to some mental prods from reading @RobFitz, I'm reminded that there are 3 words in that phrase and that each word matters.
Product Fit, Market Fit and Product Market Fit are worth each understanding in their own right. As a founder or investor, it's worth knowing the difference and which matter to your business.
An emphasis on Product Fit is most important when the market is already understood. For example, when we know that people want to play games online, the important thing is to work on building a great game. Product Fit.
An emphasis on Market Fit is important when the customers' needs are not yet fully understood. For example, if a startup was to focus on improving tools for events and event organisers, they would need to understand the current pain points and identify something real and tangible that they can improve and which people are willing to pay for it. Understanding that is first of all understanding your market. Market fit.
Product Market Fit brings the two together.
In some startups, deep research both is required to validate the business model. In others, more emphasis on product or market may be more relevant.
The most relevant word of all is "fit". Any business that succeeds needs to be fit for purpose. This "fitness" relates being adapted to the current and future environment. It's precisely the fact that the environment in which we find ourselves is constantly changing (technological trends, social trends, legislative changes etc.) that gives businesses new opportunities to exploit.
Just as an athlete can train to be fit for a certain event, a startup needs to be fit to exploit their opportunity. Usually a training schedule for boxing won't help win a swimming race. Training to run a marathon won't win the 100m sprint.
In the earliest phase of a business, research therefore needs to focus on defining the opportunity and figuring out what's needed to win that opportunity. Then it's time to get fit.