Founder/Product/Market fit
Founder/Product/Market fit
Why we as founders are an overlooked but equally important consideration in the hunt for product/market fit
TL;DR
Finding product/market fit is all that matters when building a new venture.
Having constraints are helpful to finding product/market fit so we don’t get paralysis.
The markets we enter or the products we build can make us miserable if we don’t pick them with ourselves in mind.
An entrepreneurs’ desired lifestyle and existing entrepreneurial assets are just as important of a consideration in the hunt for product/market fit as factors like market size.
The lifestyle we want to live is a constraint on the types of products that we should build.
We should pick markets that we genuinely care about so that it’s easier to be customer-obsessed and we have motivation to become market experts.
Picking markets or products to build based on our existing entrepreneurial assets can create an unfair advantage that helps us start on second base in the pursuit of product/market fit.
Hi - I’m Mike Wilner, the writer of this post which is part of my weekly newsletter, Getting Shots Up. The newsletter includes frameworks, analyses, and profiles about building entrepreneurial careers. This isn’t just startup advice – it’s a zoomed out view of how entrepreneurial people can think about constructing a career that results in a lot of high quality shots on goal.
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Founder/Product/Market fit
The only thing that matters is getting to product/market fit... When you are [before product/market fit], focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don't want to, telling customers yes when you don't want to, raising that fourth round of highly dilutive venture capital -- whatever is required. When you get right down to it, you can ignore almost everything else.
– Marc Andreesen, The only thing that matters
When working on a venture – whether it’s a side project like a newsletter or podcast, or a venture-backed startup, everything boils down to the hunt to finding product/market fit.
When trying to find product/market fit, constraints are helpful. If we have no hypotheses on the product or market we’re starting with, then we end with decision paralysis, whereas starting with some constraints forces us to start making contact and begin learning and iterating. When I advise early stage founders, I encourage them to start with some hypothesis on either the market they want to serve or the product they want to build, and to have high conviction with one and be flexible on the other. This leads to two approaches:
Product Centric: Starting with a strong hypothesis on the product or technology, being flexible on the use cases and the best market.
Market-centric: Starting with a strong hypothesis on the market you want to serve, and exercise customer obsession and work backwards from your customer’s needs to build the right product.
But there’s one piece of the equation that we’re missing: what product or market is right for the founder?
As entrepreneurs, we’re the ones making the choices about the products we want to build or the markets we want to serve.
Our desired lifestyle and our existing entrepreneurial assets are equally important considerations in the pursuit of product/market fit as traditional considerations like the market size, willingness to pay, and the level of pain with the status quo.
The markets we enter and the products we create impact our lives. Max Nussenbaum, the founder of Castle, a VC-backed property management startup that wound down in 2018, writes about how he felt that operating in the real estate market was changing him in his post My Brief and Tempestuous Love Affair With Real Estate:
We didn’t understand our market at all. We understood what the market looked like on a spreadsheet, but we didn’t understand how operating inside it for years would make us feel. This is now the advice I give to young startup founders: knowing your market isn’t just about understanding the customer need or the revenue opportunity. It’s about understanding how working within that market will change you.
I have a lot of regrets about the final days of our startup, but in the years since we shut down I’ve never once found myself wishing we hadn’t failed. I’m pretty sure I made it through my half a decade in the bowels of the real estate world with my soul intact, but I have some doubts as to whether that would’ve held through five or ten years more.
Similarly, when building my first startup (Compass, Upwork for web design projects), we decided that the best product for our customer was a project-based model where they only paid for web design projects and didn’t pay a subscription. This meant that every month, our revenue started at zero. Years later, I still sometimes text my old co-founder things like this after a few drinks:
As Noah Shanok, the founder of Stitcher put it in our interview, we have to be honest with ourselves about what we want as entrepreneurs and what brings us energy before we throw ourselves into the hurricane of searching for product/market fit at all costs.
It’s important to come back to yourself and listen to what you like and what you don't like while you're building your startup. Being honest with yourself about what those things are that you enjoy, and what those things are that you don't enjoy. When you're seeking your next job or whatever you're going to do next, maybe you want to start a company but you don't want to go out and raise a bunch of money. Maybe you don't care about a big swing, you just care about being honest with yourself. I think that part is probably the hardest and the most important.
After all, this whole “building an entrepreneurial career” thing doesn’t matter much if we aren’t happy and doing it sustainably.
So how does the founder factor into the search for product/market fit? There are three ways we’ll dissect in this post:
Constraining products based on the desired founder lifestyle: choosing to build products that allow us to have the life we want and avoiding building products that will make us hate our lives.
Making sure we’re in a market we want to serve. Picking markets that we genuinely care about so it’s easier for us to be customer-obsessed and not build resentment.
Picking a product or market that turns existing entrepreneurial assets into an unfair advantage. Reflecting on our past experiences to hypothesize products or markets where we can start on second base and find product/market fit faster.
Constraining products based on the desired founder lifestyle
Before developing hypotheses around the product to build or the market to serve with a new venture, it’s important to check in with ourselves and figure out what type of lifestyle we want as entrepreneurs. This clarity on our desired lifestyle serves as a constraint on the type of product we build – whether its a side project or a full-fledged startup.
For example, before I started writing this newsletter, I was considering building a fellowship/community for founders who had recently moved on from their startups and were figuring out what to do next. Based on my current day job and the operational burden that would be involved with building and fostering that community, I decided that a newsletter would be a better product for me to build for the market I wanted to serve (people building long-term entrepreneurial careers), with my own lifestyle as a key the constraint driving that decision.
When reflecting on the desired lifestyle we want, some of the questions worth asking include (but are not limited to):
Do I want to maintain optionality and build a business conservatively or do I want to take a massive, high-risk swing for the fences?
Would I get energy from leading a large organization with many people, or would I prefer a smaller, leaner team?
The answers to these questions set initial constraints on the products we build.
For example, marketplaces like Thumbtack (hiring local professionals), consumer apps like Clubhouse (audio-based social app with group chats), or platforms like Airtable (cloud-based spreadsheets with database functionality), serve massive markets and are generally winner-take-all (or few-winners-take-all). They’re hyper-competitive and typically require a lot of funding to work at even a modest scale. To build these businesses, you typically need to swing for the fences or not show up at all.
On the other hand, SaaS products like Practice (software for coaching businesses), API-driven products Listen Notes (API for podcast search), content businesses like the Everything newsletter (substack-based publication that costs $20/m), and courses or communities like Product Manager HQ (Product management training, community, and certifications) can be successful at a small scale, while still growing to service bigger markets. This gives the founders of these businesses the opportunity to grow conservatively and maintain optionality in how they want to grow their business.
While some startups might start out as conservatively growing businesses, they can still turn into massive companies. For example, Zapier was founded in 2011 as an API business and they raised only $1.3M in funding over the company’s entire lifetime, growing it profitably with a lean, remote-first team. Then, a few weeks ago Sequoia bought secondary shares in Zapier, valuing the company at $4B.
Similar to optionality vs. swing-for-the-fences mentality, our willingness to build a large, people-heavy organization impacts the types of products we can build.
For example, tech-enabled services like Bench (bookkeeping service powered by humans), software with high implementation costs like VTS (commercial real estate software), and on-demand services like 99designs (on-demand design services) or Uber all require a lot of humans to make the products work.
On the other hand, SaaS businesses, API businesses, content/community businesses, and D2C consumer product businesses can work and grow while running more lean.
So in the search for product/market fit, if the market is asking for a certain type of product (e.g. on-demand service), before we respond to the needs of the market and build the product they want, it’s worth checking in with ourselves to see if we want to build that business. Conventional wisdom is that the fastest path to company success would be listening to the market. But if the market is asking us to build a product that we know is going to make us miserable as founders, then maybe we shouldn’t build it.
Making sure we’re in a market we want to serve
One of the shortcuts in the hunt for product/market-fit is being customer-obsessed. If we’re working backwards from the needs of a customer rather than pushing a product on them, the chances of finding product/market-fit are higher.
Customer obsession can be a learned skill (I’ve learned a lot about it at Amazon). But even if you haven’t cultivated the skills involved in working backwards from customer needs, it’s easy to exercise customer-obsession if we genuinely care about the customer and the market that we’re serving.
Whenever hypothesizing a market to start with or a pivot into a new market, most startup advice focusing on the market’s willingness to pay, market size, and the market’s willingness to change behaviors. But what if we as founders simply don’t care all that much about the market?
I encountered this challenge when building Compass. Our customers were primarily small business owners who were self-employed and had no more than 5 employees. While I had a deep appreciation for small business owners, I wasn’t all that interested in the small business space, and I wasn’t innately curious enough about the day-to-day operations of building a small business to be organically customer-obsessed. I didn’t understand our customer deeply enough to make the right pivots with our product, and that was one of the reasons we never found product/market fit.
Whenever thinking about markets to enter, it’s worth checking in with ourselves and asking some essential questions:
Do I care about helping this customer?
Do I want to spend the next 5-10 years of my life dedicating myself to becoming an expert about this market?
Do I like the people who make up this market?
If the answer to any of those questions is “no,” then it’s a red flag its worth thinking twice about entering that market.
Picking a product or market that turns existing entrepreneurial assets into an unfair advantage
In a recent post on Making progress on ventures before even starting, I wrote about how one way to de-risk future ventures before starting was to “Reflect on entrepreneurial assets to determine future ventures where we can start on second base.”
We already have experiences which give us a unique blend of skills, network/audience, and domain expertise that would be relevant for some venture. Reflecting on our existing entrepreneurial assets and can give us an answer to the question: “what type of venture would leverage my unique experiences would give me a big day 1 advantage?”
So when hypothesizing a product or market in the hunt for product/market-fit, it’s worth asking reflecting on existing entrepreneurial assets to answer the question:
What is the product where I have an unfair advantage to build it?
What is the market that I have an unfair advantage to serve?
One of the best examples I’ve seen recently that answers both of these questions at the same time is Wes Kao, who just announced that she had co-founded a platform for cohort-based-courses, led by First Round Capital.
Before founding this new company, she was the co-founder and Executive Director of Seth Godin's altMBA, growing altMBA from from zero to 550 cities in 45 countries in three years. She then spent almost 3 years building, launching, and growing cohort-based courses based on this experience, including Professor Scott Galloway's Strategy Sprint, Write of Passage by David Perrell, and more.
Wes had deep domain expertise on cohort-based courses, and a network of creators and entrepreneurs who either had built cohort-based courses before or who might be interested in building them in the future.
The highest leverage use of Wes’ existing entrepreneurial assets I could possibly imagine is building a platform for cohort-based courses. You can see in her announcement tweet thread how deep her domain expertise is on cohort-based learning (which I’m sure is part of why First Round invested).
Wes’ example goes beyond what VCs often talk about as “founder/market fit,” which is when founder is building something in a market they understand deeply. Wes is an example of both founder/product fit (cohort-based courses) and founder/market fit (experts/instructors who want to scale their instruction). You can see this incredible alignment manifest when Wes shares a tweet that references her experience building cohort-based courses to promote a new cohort-based course on how to build a cohort-based course, powered by her cohort-based course platform.
While it’s very possible that Wes’ startup will have to make some pivots along the way to find true product/market-fit, they started on second base with a compelling thesis behind the product and early adopters, which increases the chances and speed at which they may be able to find product/market fit.
In the hunt for product/market fit, we can ensure we’re building a life we want to build while accelerating the path towards product/market fit. We just have to think about ourselves with the same consideration as we do traditional factors like market size or level of pain with the status quo.