What is Product-Market Risk?

Product-Market Risk is the risk that you build something nobody wants—the #1 reason startups fail. It has two parts: Product Risk (can we build it?) and Market Risk (will anyone pay for it?). Most founders over-estimate product risk and under-estimate market risk. You can build amazing tech that nobody wants. De-risk by talking to customers before building, shipping MVPs, and validating demand early.

When Should You Use This?

Think about Product-Market Risk before writing code—talk to 10-20 potential customers first. Ask: "Who is desperate for this solution right now?" and "What are they using today?" If the answer is "nothing" or "they're fine with Excel," you have market risk. Test demand with landing pages, pre-orders, or concierge MVPs before building the full product.

Common Mistakes to Avoid

• •Building in stealth—talk to customers early, not after you've built for 12 months
• •"If we build it they will come"—no, they won't, you need painful problems
• •Only talking to friends—they'll be nice, talk to strangers who'll pay
• •Assuming you're the customer—founder intuition works sometimes, validation is safer
• •Ignoring competition—if no one else is solving this, maybe it's not a problem

Real-World Examples

• •Google Wave—solved a problem nobody had, beautiful product, zero traction
• •Quibi—assumed people wanted 10-min shows on phones, market said no
• •Webvan—built infrastructure before proving demand, burned $800M
• •Instagram—started as Burbn (location app), pivoted to photos after seeing usage