The Four-Fits model of startup success…ikigai style.

Brian Balfour created one of the best frameworks for viewing the future success of a startup.

We recreate his thesis using the ikigai — the Japanese secret to a long and happy life.

These break down into the four fits

1. product

2. channel

3. model

4. market

MARKET - PRODUCT FIT

Your product solves problems so crucial to your target audience that they are willing to pay you for it.

The term has been reversed to market-product fit in that the market is more critical to success than the product. 

CHANNEL - PRODUCT FIT

The channel-product fit requirement follows the power-law maxim that to be a successful company, one must first find a successful avenue to reach your customer.

Once found, the law reasons that this will form the bulk ~ 70% of sales/revenue. Thus, channel product fit is key to the growth of the business's overall dominance.

CHANNEL - MODEL FIT

Your Average Annual Revenue Per User (ARPU) must be higher than Customer Acquisition Cost (CAC) from a channel. 

You can scale your channel profitably, and customer acquisition comes at a lower rate than their lifetime value - hence profit.

—Many startups fail here; Facebook and Google are already expensive and approaching entropy!

MODEL - MARKET FIT

In simple terms, the goal is to get to $1m annually recurring revenue. An average valuation multiple of 10 - leads to a $10m valuation.

Derived by simple, but hard to achieve, math. Your {Average Revenue Per User} ARPU x Total Customers In Market x % You Think You Can Capture.

For Example: 

[$2,000 per annum * 500 Customers] or 

[$200 per annum * 5,000 Customers]

Find your four fits—and success will follow.