How do you know if you have validated the problem space enough to start dedicating engineering resources to building out the product?

This is hard! For me, it's a mix of having a good understanding and confidence that you have 

(1) a clear hypothesis that you can test with a minimally viable product that is shaped by data and customer/market research,
(2) confidence that you have a potential solution that can prove the hypothesis correct, and
(3) an understanding of the risk and opportunity for building that solution, including the time it'll take to build, the availability of users willing to try your solution.

When in doubt, it's always a helpful rule of thumb (in my opinion) to simplify the scope of your solution as much as possible, to both reduce engineering time/complexity AND to not squander the opportunity cost of shipping too late (see the Reid Hoffman quote question posted as well!). The hardest one in my opinion is 1 - making sure that you get down to the real essence of an unmet customer need and being incredibly clear and specific on how you think your product can solve it, and how you will know.

For a new product in a new market, I don’t think you can ever validate the problem space enough. Once you have reasonable confidence that the users (and buyers) exist for the problem space your product tackles, and there are viable ways to create a business out of that solution, the best next step is to involve engineering to build a prototype of the solution. Then you can test that prototype with a representative sample of the expected user base to get early feedback and iterate on building out the product and grow the business.

For 0-1 products, involving engineering early as a partner to the overall product definition and development process is best, so you can iterate together on building the right product for the right audience.

Before investing in engineering resources you want to build conviction around the following:

1. Is there a market need? Are you fulfilling a true gap in the market?

2. Do you have a differentiated vision to deliver on this need?

3. Is there willingness to pay? 

4. Does the business model make sense such that you see a path to ROI for the business?

5. Is there a clear route to market (you know how to sell / acquire customers)?

6. Does your business have (or plan to have) the capabilities to deliver on this product (ex operational, technical or other expertise) such that it is strategic to expand in this direction?

Overall you want to be able to articulate what the investment unlocks for the company and how.