Introduction: Why Most Products Fail

42% of startups fail because they build products nobody wants. Not because of poor execution, funding issues, or competition. They build the wrong thing.

The brutal truth:

• Users say they want features they'll never use
• Markets look attractive until you try to sell
• Assumptions feel like facts until tested
• Building without validation = expensive gambling

This framework prevents that.

What you'll learn:

• How to validate before building anything
• Which metrics actually predict success
• Testing methods that work
• Red flags that save months
• When to pivot vs persevere
• Real examples from successful products

Based on: 50+ product validations at Precode, £2M+ in validated development, partnerships with UK accelerators, tracked outcomes 12-24 months post-launch.

Part 1: Understanding Product-Market Fit

What Product-Market Fit Actually Means

Marc Andreessen's definition:"Product-market fit means being in a good market with a product that can satisfy that market."

Practically, PMF is when:

• Users actively seek your product
• Word-of-mouth growth accelerates
• Usage retention stays high
• Sales become easier
• Team struggles to keep up with demand

PMF is NOT:

• Having users (could be courtesy usage)
• Having revenue (could be unsustainable)
• Having growth (could be paid, not organic)
• Having funding (investors can be wrong)
• Having press (hype ≠ demand)

The Three Levels of Validation

Level 1: Problem Validation

• Does this problem exist?
• Do people care enough to solve it?
• How do they solve it today?
• What's the pain level?

Until validated:

• Don't design solutions
• Don't write code
• Don't raise money for building

Level 2: Solution Validation

• Does your solution solve the problem?
• Will people use this approach?
• What's the minimum they need?
• What delights vs what's essential?

Until validated:

• Don't build production code
• Don't scale operations
• Don't hire team

Level 3: Business Model Validation

• Will people pay?
• How much will they pay?
• What's acquisition cost?
• Can this be profitable?

Until validated:

• Don't scale marketing
• Don't expand team significantly
• Don't raise large rounds

Most founders skip to Level 3 without validating 1 and 2. This is expensive.

Part 2: Problem Validation Framework

Step 1: Define Your Hypothesis

Problem hypothesis template:

[Target customer segment] experiences [specific problem]
when [context/situation], causing [negative outcome].

They currently solve this by [current solution],
but this fails because [limitation].

This problem occurs [frequency] and costs them
[time/money/opportunity].

Example:

UK tradespeople (plumbers, electricians) struggle to
create professional quotes on-site when meeting customers,
causing lost sales and follow-up overhead.

They currently use paper quotes or wait until back at
office to send via email, but this fails because:
- 30-40% of quotes are never sent
- Customers expect instant service
- Tradespeople hate admin work

This happens 5-10 times per week per tradesperson
and costs 2-3 hours admin time plus lost sales.

Make it specific:

• Who exactly?
• What problem exactly?
• When exactly?
• Why do current solutions fail?
• Quantify the cost

Step 2: Interview Target Customers

Goal: Find if problem exists and matters

Not: Will they buy your solution

Interview 20-30 people:

• 20 for B2C products
• 30 for B2B products
• 50+ for enterprise products

Why so many?

• First 5: Learning interview technique
• Next 10: Finding patterns
• Final 10: Confirming patterns
• More: Higher confidence

The Mum Test (crucial reading):

• Don't talk about your idea
• Don't ask hypothetical questions
• Talk about their life
• Ask about past behaviour
• Dig into specifics

Good questions:

"Tell me about the last time [problem scenario]."

• Gets specific stories
• Real behaviour, not hypothetical

"How do you currently solve [problem]?"

• Reveals current solutions
• Shows if problem worth solving

"What's frustrating about [current solution]?"

• Finds gaps
• Identifies opportunities

"If you could wave a magic wand..."

• Uncovers ideal outcome
• Not constrained by current reality

"What have you tried in the past?"

• Shows if they've attempted solutions
• Indicates problem severity

"How much time/money does [problem] cost you?"

• Quantifies impact
• Validates if worth solving

Bad questions (avoid these):

"Would you use a product that...?"

• Hypothetical
• Politeness bias
• Not useful

"How much would you pay for...?"

• Hypothetical pricing
• Unreliable
• Asked too early

"Do you think this is a good idea?"

• Seeking validation
• Useless feedback
• Waste of time

"Would you buy this if I built it?"

• Politeness: "Maybe!"
• Reality: Probably not
• False confidence

Interview process:

1. Recruit
   • LinkedIn outreach
   • Industry forums
   • Existing network
   • Cold email
   • Offer £20-£50 Amazon voucher
2. Schedule
   • 30 minutes
   • Video call or phone
   • Record (with permission)
   • Take notes
3. Interview
   • Intro (2 mins)
   • Their background (5 mins)
   • Problem questions (20 mins)
   • Wrap up (3 mins)
4. Analyse
   • Transcribe key quotes
   • Note pain points
   • Track patterns
   • Update hypothesis

Step 3: Analyse Results

Look for:

Problem exists:

• Multiple people describe same problem
• Specific stories, not vague descriptions
• Clear frustration
• Current workarounds exist (proves problem matters)

Problem matters:

• Frequent occurrence
• High cost (time or money)
• Active attempts to solve
• Willing to pay for solution

Market opportunity:

• Large enough segment
• Accessible to reach
• Growing not shrinking
• Willing to adopt new solutions

Red flags:

Problem doesn't exist:

• Can't find people with problem
• People don't remember examples
• "Interesting idea" but no pain
• No current workarounds

Problem doesn't matter:

• Happens rarely
• Low cost/impact
• People don't bother solving
• "Nice to have" not "must have"

No market:

• Too small segment
• Hard to reach
• Declining market
• Resistant to change

Decision points:

20+ people confirm problem:→ Proceed to solution validation

10-19 confirm, 10+ don't:→ Refine target segment or problem hypothesis

Fewer than 10 confirm:→ Pivot or abandon

Part 3: Solution Validation Framework

Step 1: Create Low-Fidelity Prototype

Goal: Test if your solution approach works

Not: Build polished product

Methods by product type:

For SaaS/web apps:

• Figma prototype (clickable screens)
• 5-10 key screens only
• Rough design fine
• Show core workflow

For mobile apps:

• Marvel or Figma prototype
• Test on phone
• Key screens only
• Core journey

For physical products:

• Cardboard prototype
• 3D renders
• Detailed sketches
• Storyboards

For services:

• Process diagram
• Before/after scenarios
• Customer journey map
• Role-play walkthrough

Time investment: 1-2 weeks maximum

Cost: £0-£2,000 if outsourced

Step 2: Test With Target Users

Goal: See if solution solves problem

Process:

1. Recruit testers (10-15 people)

• From problem interviews
• New people in target segment
• Mix of super-users and novices

2. Test protocol

• Show prototype
• Give realistic task
• Watch, don't help
• Note where stuck
• Ask follow-up questions

3. Key questions

"Walk me through how you'd use this."

• Tests understanding
• Reveals confusion
• Shows natural usage

"What would you do first?"

• Tests discoverability
• Reveals priorities
• Shows expectations

"How does this compare to [current solution]?"

• Validates improvement
• Identifies gaps
• Tests value proposition

"What's missing?"

• Finds essential features
• Identifies deal-breakers
• Validates MVP scope

"If this existed tomorrow, would you use it?"

• Not "would you buy" yet
• But tests serious interest
• Follow with "why/why not?"

4. Observe behaviour

• Where do they hesitate?
• What confuses them?
• What delights them?
• What's their path?
• What do they skip?

Step 3: Iterate or Pivot

Strong validation signals:

Users "get it" immediately:

• Understand purpose in seconds
• Can complete core task unaided
• Minimal explanation needed

Clear improvement over current:

• Faster than current solution
• Easier than current solution
• Better outcome than current
• Would switch from current

Emotional response:

• Excitement when seeing it
• "When can I use this?"
• "Where do I sign up?"
• Telling others about it

Proceed to building if 8/10 users:

• Understand it without help
• Can complete core task
• Say they'd use it
• Show genuine interest

Weak validation signals:

Confusion:

• Don't understand purpose
• Can't complete task
• Need lots of explanation
• "Is this for [wrong segment]?"

Polite interest:

• "Interesting idea"
• "Might be useful"
• "I'd have to try it"
• No excitement

Missing essentials:

• "I'd need [missing feature]"
• "Doesn't solve [part of problem]"
• "What about [edge case]?"
• Core workflow incomplete

Iterate if:

• Some understanding but needs refinement
• General direction right, execution wrong
• Core workflow needs adjustment

Pivot if:

• Consistent confusion across testers
• Doesn't solve core problem
• Too complex for value
• Better opportunities emerged

Part 4: Business Model Validation

Validating Willingness to Pay

Pricing validation methods:

Method 1: Ask directly (after solution validation)

"If this cost £X per [unit], would you buy it?"

Then follow with:

• "Why/why not?"
• "What would you pay?"
• "How does that compare to [current solution cost]?"

Test 3-4 price points:

• Anchor high first
• Work down if resistance
• Note where enthusiasm shifts

Example:

• "£50/month?" → "Too expensive"
• "£20/month?" → "Maybe"
• "£10/month?" → "Definitely"
• Sweet spot: £15-£20

Method 2: Competitor pricing

Research what customers pay now:

• Direct competitors
• Alternative solutions
• Related tools
• Time/cost savings

Example:

• Competitor A: £30/month
• Competitor B: £45/month
• Manual process cost: £100/month in time
• → Price at £25/month captures value, beats competitors

Method 3: Pre-orders

Most powerful validation:

• Actually collect money
• Proves real intent
• Fund development
• Build early customer base

Approach:

• Create landing page
• Explain product
• Offer pre-order discount (30-50% off)
• Charge immediately (give refund option)
• Deliver within stated timeline

Example:

• Normal price: £100
• Pre-order: £50
• Goal: 100 pre-orders = £5,000
• Validates demand + funds MVP

Red flags:

• Can't get 10 pre-orders (lack of demand)
• Refund rate >30% (wrong audience or promise)
• Price resistance everywhere (value unclear)

Method 4: Concierge MVP

For service-heavy products:

• Manually deliver service
• Charge real money
• Learn what's actually needed
• Build software to automate

Example:

• Product: Automated social media scheduling
• Concierge: You manually schedule for customers
• Learn: What content, timing, platforms
• Build: Automate learnings

Validates:

• Willingness to pay
• Actual needs vs assumptions
• Price points
• Service requirements

Understanding Unit Economics

Key metrics to validate:

Customer Acquisition Cost (CAC):

CAC = Total Marketing + Sales Costs / New Customers

Test acquisition channels:

• Google Ads (quick feedback)
• LinkedIn Ads (B2B)
• Content marketing (organic)
• Cold outreach (manual)

Track:

• Cost per click
• Click to lead conversion
• Lead to customer conversion
• Total cost per customer

Aim for initial CAC: £100-£500 (depends on product)

Customer Lifetime Value (LTV):

LTV = Average Revenue per Customer × Average Customer Lifespan

Early estimation:

• SaaS: Monthly price × 12-36 months
• B2C: Initial purchase + repeat purchases
• Enterprise: Annual contract × 2-5 years

LTV:CAC Ratio:

Goal: LTV should be 3× CAC minimum

Examples:

Good economics:

• SaaS: £50/month, keeps 24 months = £1,200 LTV
• CAC: £300
• Ratio: 4:1 ✓

Poor economics:

• SaaS: £10/month, keeps 6 months = £60 LTV
• CAC: £50
• Ratio: 1.2:1 ✗

Payback period:

Payback = CAC / (Monthly Revenue per Customer × Gross Margin%)

Aim for: <12 months

Part 5: Validation Metrics That Matter

Early-Stage Metrics (Pre-PMF)

Problem validation phase:

Interview completion rate:

• Target: 70%+ of contacted people agree to interview
• Low rate: Problem not resonating

Problem recognition:

• Target: 80%+ confirm problem exists
• Measures: Real problem vs imagined

Current solution usage:

• Target: 90%+ have workaround/solution
• Proves: Problem worth solving

Pain score (1-10 scale):

• Target: Average >7
• Measures: Problem severity

Solution validation phase:

Task completion rate:

• Target: 80%+ complete core task unassisted
• Measures: Solution usability

Time to understand:

• Target: <30 seconds to grasp value
• Measures: Clarity

Preference over current:

• Target: 80%+ prefer your solution
• Measures: Competitive advantage

Signup intent:

• Target: 60%+ say they'd sign up
• Measures: Genuine interest

Growth-Stage Metrics (Seeking PMF)

Activation:

% of signups who complete core action

Benchmarks:

• SaaS: 40-60%
• Consumer: 25-40%
• Enterprise: 60-80%

Retention:

% of users active after X days

Benchmarks:

• Day 1: 60-80%
• Day 7: 30-50%
• Day 30: 15-30%

PMF indicator: Retention curve flattens (users stick)

Sean Ellis Test:

"How would you feel if you could no longer use [product]?"
- Very disappointed: >40% = PMF

Net Promoter Score (NPS):

"How likely recommend (0-10)?"
- Promoters (9-10): % minus
- Detractors (0-6): %
= NPS Score

Benchmarks:

50 = Excellent

• 30-50 = Good
• <30 = Work needed

Organic growth rate:

% new users from word-of-mouth/referral

PMF indicator: >40% organic

Post-PMF Metrics

Revenue growth:

• Month-over-month: 15-20%+
• Compounding acceleration

Magic number (SaaS):

(New ARR This Quarter × 4) / Sales+Marketing Spend Last Quarter

Benchmarks:

1.0 = Efficient growth

• 0.75-1.0 = Good
• <0.75 = Improve unit economics

Net Revenue Retention:

(Starting ARR + Expansion - Contraction - Churn) / Starting ARR

PMF indicator: >100% (expansion > churn)

Part 6: Real Validation Examples

Case Study 1: SalesLite (Mobile CRM)

Problem validation:

Hypothesis:UK tradespeople struggle creating quotes on-site, losing sales to competitors who provide instant quotes.

Interviews: 25 UK tradespeople

Findings:

• 22/25 confirmed problem
• Average 8 quotes/week
• 35% never convert to sent quotes
• Lose £15K-£30K annually
• Hate admin work
• Want voice input (hands often dirty)

Pain score: 8.2/10

Decision: Strong problem validation → proceed

Solution validation:

Prototype: Figma mobile app (voice input flow)

Testing: 12 tradespeople

Results:

• 11/12 understood immediately
• 10/12 completed quote in <2 mins
• All preferred to paper/email
• "When can I use this?" from 9/12

Key insight: Voice input was differentiator

Decision: Build MVP

Business validation:

Pre-orders: £15/month offered

Results:

• 8 pre-orders from 12 testers
• Additional 12 from landing page
• £300/month recurring validated

Launched: 2-week sprint, £25,000

Outcome:

• 45 paying customers in 3 months
• £675/month recurring revenue
• 4.8/5 app store rating
• Growing 15% monthly

PMF indicators:

• 65% D30 retention
• NPS: 58
• 45% organic growth
• Sean Ellis: 52% "very disappointed"

Case Study 2: Logistics SaaS (Failed, Then Pivoted)

Initial problem validation:

Hypothesis:Small delivery companies need route optimization software.

Interviews: 18 delivery company owners

Findings:

• Only 7/18 confirmed problem
• Most use driver knowledge
• Low pain (6.1/10)
• Already have solutions (Google Maps)
• Not willing to pay much

Red flag: Weak problem validation

Decision: Should have stopped. Didn't.

Built anyway: £15,000, 6 weeks

Result:

• Launched to crickets
• 3 signups, 0 paid
• Product worked fine
• Nobody cared enough

Lesson: Strong execution of weak idea = failure

Pivot validation:

New hypothesis: (from customer interviews)Drivers, not managers, have the pain. Real problem: Proof of delivery photos + customer signatures taking too long.

Interviews: 20 delivery drivers

Findings:

• 18/20 confirmed problem
• 5-10 deliveries daily
• Photo + signature takes 2-3 mins per stop
• 20-30 mins wasted daily
• Pain score: 8.7/10

Decision: Pivot to driver app

Solution validation:

Prototype: Mobile app (one-tap photo + signature)

Testing: 10 drivers

Results:

• All completed flow <30 seconds
• Enthusiastic response
• "This saves me 30 minutes a day"

Business validation:

Freemium model: Free for drivers, £5/driver/month for managers

Result:

• 3 pilot companies
• 42 drivers using it
• £210/month recurring

Outcome:

• £250K seed raised
• Growing 25% monthly
• PMF achieved after pivot

Lesson: Listen to users, pivot when validated

Case Study 3: B2B SaaS (False Positive)

Problem validation:

Hypothesis:Marketing teams need better social media scheduling.

Interviews: 30 marketing managers

Findings:

• 28/30 confirmed frustration with current tools
• Pain score: 7.5/10
• Willing to switch

Decision: Strong validation → proceed

Solution validation:

Prototype: Clean UI, unlimited scheduling

Testing: 15 marketing managers

Results:

• All loved interface
• Enthusiastic feedback
• "Would definitely use this"

Built MVP: £20,000, 8 weeks

Launch result:

• 150 signups first month
• Terrible activation (12%)
• Worse retention (5% D30)
• Zero paid conversions

What went wrong:

False positive signals:

• Problem real but low priority
• "Frustration" ≠ urgent need
• Existing tools "good enough"
• Users polite in testing, don't switch in reality
• No urgent hair-on-fire problem

Key metric missed: Didn't validate problem priority

Should have asked:

• "When did you last look for alternatives?"
• "What's preventing you from switching?"
• "Where does this rank in your problems?"

Lesson: Problem must be urgent, not just real

Part 7: When to Build vs When to Walk Away

Green Lights (Build It)

All three validated:

1. Problem validation ✓
   • 80%+ confirm problem
   • Pain score >7/10
   • Frequent occurrence
   • Current solutions inadequate
2. Solution validation ✓
   • 80%+ complete core task
   • Prefer your solution
   • Genuine excitement
   • Clear improvement
3. Business validation ✓
   • 50%+ willing to pay
   • Unit economics work (LTV:CAC >3:1)
   • Market large enough
   • Accessible customers

Proceed with confidence:

• 5-Day UX Sprint (£10,000)
• 1-2 Week MVP Sprint (£12,500-£25,000)
• Beta launch
• Iterate toward PMF

Book discovery call

Yellow Lights (Iterate)

Mixed signals:

Scenario 1: Problem strong, solution weak

• Clear problem validation
• Solution confusing or incomplete
• Missing key features

Action: Redesign solution, retest

Scenario 2: Problem weak, solution strong

• Some people have problem, not many
• Love solution but wrong segment

Action: Find right target market

Scenario 3: Both okay, business unclear

• Problem and solution validated
• Pricing uncertain
• Unit economics unproven

Action: Test pricing, try pre-orders

Timeline: 2-4 more weeks validation

Red Lights (Walk Away or Pivot)

Stop if:

Can't validate problem:

• <50% confirm problem
• Pain score <6/10
• Low frequency
• No urgency

Can't validate solution:

• Consistent confusion
• Can't complete core task
• No preference over current
• Lots of "nice to have" feedback

Can't validate business:

• Nobody will pay
• LTV:CAC <2:1
• Market too small
• Acquisition cost too high

Economics don't work:

• CAC >12 month payback
• High churn (>10%/month)
• Low LTV (<£500)

Better opportunities exist:

• Adjacent problem more urgent
• Different segment more interested
• Easier problem to solve

Sunk cost fallacy:

• Don't build because you already invested time
• Don't build because you told people
• Don't build because you want to

Build because validation proves it'll work.

Part 8: The Precode Validation Approach

Validation Before Building

Our process:

Week 1-2: Problem validation (you do this)

• Define hypothesis
• Interview 20-30 people
• Analyse results
• Decide: proceed or pivot

Week 3: Solution design (we do this)

• 5-Day UX Sprint (£10,000+VAT)
• High-fidelity prototype
• Ready for user testing
• Professional design

Week 4: Solution validation (we help)

• Test with 10-15 users
• Watch task completion
• Gather feedback
• Iterate designs (included)

Week 5-6: Build validated MVP (we do this)

• 1-2 Week MVP Sprint (£12,500-£25,000)
• Working product
• Production-ready
• Launch-ready

Total timeline: 6 weeks
Total investment: £22,500-£35,000

vs traditional approach:

• 3-6 months development
• £80,000-£150,000
• Build first, validate later
• High failure risk

Why This Works

Validation-first advantages:

1. Lower risk

• Validate £10K investment before £150K
• Test with hundreds before millions
• Pivot cheap, not expensive

2. Better products

• Built what users actually need
• Informed by real feedback
• User-tested design

3. Faster to market

• No wasted features
• Clear requirements
• Efficient development

4. Higher success rate

• 3-4× better outcomes
• PMF achieved faster
• Less pivoting needed

Real stats from Precode projects:

Products built with validation:

• 72% achieve some PMF within 6 months
• 45% raise funding
• 38% reach profitability
• Average time to PMF: 4.5 months

Products built without validation:

• 28% achieve PMF
• 15% raise funding
• 12% reach profitability
• Average time to PMF: 12+ months (if at all)

Part 9: Validation Tools and Resources

Interview Tools

Recruitment:

• LinkedIn (professional products)
• Reddit (consumer products)
• UserInterviews.com (paid panel)
• Respondent.io (B2B participants)

Scheduling:

• Calendly (£8-£12/month)
• Cal.com (free)

Recording:

• Zoom (free-£12/month)
• Loom (free-£10/month)
• Otter.ai (transcription, £8/month)

Analysis:

• Notion (organise notes, free-£8/user)
• Airtable (tracking, free-£20/month)
• Dovetail (research tool, £25/user/month)

Prototype Tools

Web/SaaS:

• Figma (£12/user/month, best option)
• Framer (£5-£15/month)
• Webflow (£14-£39/month)

Mobile:

• Figma (best for mobile too)
• Marvel (£10-£40/month)
• InVision (free-£8/month)

No-code for validation:

• Bubble.io (£25-£115/month)
• Webflow (£14-£39/month)
• Glide (£25-£40/month)

Landing Page Tools

Quick landing pages:

• Carrd (£9-£49/year)
• Landen (£20-£72/month)
• Unicorn Platform (£8-£16/month)
• Webflow (£14/month)

Features needed:

• Clear value proposition
• Email capture
• Payment integration (Stripe)
• Analytics (Google Analytics 4)

Analytics Tools

Early stage:

• Google Analytics 4 (free)
• Plausible (£9-£29/month, privacy-friendly)
• PostHog (free-£50/month)

Product analytics:

• PostHog (events and funnels)
• Mixpanel (free up to 100K events)
• Amplitude (free up to 10M events)

User feedback:

• Typeform (£21-£69/month)
• Hotjar (£0-£39/month, heatmaps)
• Intercom (£59+/month)

Part 10: Next Steps

Your Validation Roadmap

Weeks 1-2: Problem validation

• Define hypothesis
• Recruit interviewees
• Conduct 20-30 interviews
• Analyse patterns
• Decision: proceed or pivot

Week 3: Solution design

• Book 5-Day UX Sprint (£10,000)
• Get professional prototype
• Prepare for testing

Week 4: Solution validation

• Test with 10-15 users
• Analyse feedback
• Iterate design
• Decision: build or iterate

Weeks 5-6: Build MVP

• Book 1-2 Week MVP Sprint (£12,500-£25,000)
• Get working product
• Deploy to production

Weeks 7-10: Beta launch

• 50-100 beta users
• Track metrics
• Gather feedback
• Iterate

Month 4+: Scale

• Find PMF
• Optimize metrics
• Growth experiments
• Team building

Ready to Validate Your Idea?

Book free 30-minute discovery call:

https://www.precode.co/discovery

We'll discuss:

• Your product hypothesis
• Validation approach
• Testing strategy
• Timeline and costs
• Next steps

No pressure. Honest feedback on validation needs.

Conclusion: Validation Before Building

The expensive way:

• Build for 6 months
• Launch to silence
• Realise wrong product
• Pivot or die

The smart way:

• Validate in 4 weeks
• Build in 2 weeks
• Launch with confidence
• Achieve PMF faster

Investment comparison:

Build-first approach:

• Development: £80K-£150K
• Time: 6-12 months
• Success rate: 20-30%
• Cost if wrong: Everything

Validate-first approach:

• Validation + MVP: £22.5K-£35K
• Time: 6 weeks
• Success rate: 70-75%
• Cost if wrong: £10K-£22.5K (vs £80K-£150K)

The framework:

1. Validate problem (free, 2 weeks)
2. Design solution (£10K, 1 week)
3. Validate solution (free, 1 week)
4. Build MVP (£12.5K-£25K, 1-2 weeks)
5. Launch and iterate (ongoing)

Validation isn't a phase. It's forever.

Even after PMF, keep validating:

• New features
• New markets
• New segments
• New pricing

Products that win validate constantly.

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