Founder/market fit

An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls “product/market fit”, which he defines as “being in a good market with a product that can satisfy that market”. Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that ”the life of any startup can be divided into two parts: before product/market fit and after product/market fit.”

But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee calls “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”

A few points about founder/market fit:

Founder/market fit can be developed through experience: No one is born with knowledge of the education market, online advertising, or clean energy technologies. You can learn about these markets by building test projects, working at relevant companies, or simply doing extensive research. I have a friend who decided to work in the magazine industry. He discovered some massive inefficiencies and built a very successful technology company that addressed them. My Founder Collective partners Eric Paley and Micah Rosenbloom spent many months/years becoming experts in the dental industry in order to create a breakthrough dental technology company.

Founder/market fit is frequently overestimated: One way to have a deep understanding of your market is to develop product ideas that solve problems you personally have. This is why Paul Graham says that “the best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?” This is generally an excellent heuristic, but can also lead you astray. It is easy to think that because you like food you can create a better restaurant. It is an entirely different matter to rent and build a space, market your restaurant, manage inventory, inspire your staff, and do all the other difficult things it takes to create a successful restaurant. Similarly, just because you can imagine a website you’d like to use, doesn’t mean you have founder/market fit with the consumer internet market.

Founders need to be brutally honest with themselves. Good entrepreneurs are willing to make long lists of things at which they are have no ability. I have never built a sales team. I don’t manage people well. I have no particular knowledge of what college students today want to do on the internet. I could go on and on about my deficiencies. But hopefully being aware of these things helps me focus on areas where I can make a real contribution and also allows me to recruit people that complement those deficiencies.

Most importantly, founders should realize that a startup is an endeavor that generally lasts many years. You should fit your market not only because you understand it, but because you love it — and will continue to love it as your product and market change over time.

http://www.HubSpot.com Dharmesh Shah

Excellent point. I could not agree more.

The first question I often ask entrepreneurs after they tell me *what* they are working on is “Why are you working on this?” If there’s not a compelling “why” it’s a red flag. Founders need to *love* their market.

http://www.cdixon.org chris dixon

Great question to ask.

Anonymous

An important and oft ignored point; well written.
http://argylesocial.com/ Eric Boggs

Well said re: the list of things one doesn’t do well.

It took me awhile to have the self-confidence to admit that I’m not the process-driven manager-type. After coming to terms with myself, I hired the most analytical, process-driven person I know to help manage the day-to-day at our company. It amazes me how much he loves the process minutia that I tend to ignore. It also amazes me how much he’s improved our team as a result.

http://www.cdixon.org chris dixon

Yeah, I think it’s a common mistake to think an entrepreneur needs to be a process driven manager. The key is realizing you aren’t one and recruiting a cofounder or senior employee who is.

Anonymous

There’s no shortage…

http://twitter.com/mikebrodyVEVO michael brody

Since I am up at 12:57 on a Sunday night trying to become good at things I don’t know how to do well, I figured I would add my 2 cents.

I’m 22. I dropped out of college to do a startup. I learned how to write HTML 6 months ago. Code in javascript 3 months ago. I’m lucky to have a very technical friend/cofounder to build the backend while I focus on the front.

I have a whole list of things I can’t do well. But I have an even longer list of things I couldn’t do at all 6 months ago. This includes: writing HTML & CSS and Javascript, graphic design and layouts, managing interns, conducting product demos over WebEx meetings, pitching advisors - in short: adding a meaningful amount of value to a bootstrapped startup.

If I didn’t absolutely love the problem I was solving and the product I was building, I would have stayed ‘the business guy’. What I’ve learned from bootstrapping is this: The people who love what they do for profit will stay in the role they’ve specialized in, rationalizing that they’re doing what they’re good at. People who truly love the market will find ways to add value at any cost, at any time of day. Even if that means taking 3 days of ‘productivity’ to learn how to code from the ground up- just so that for the next 3 months you’ll be able to speed up your cofounder’s production until you raise money to hire someone.

You’re completely right about founder/market fit, but I would add that in a bootstrapped startup, no matter how knowledgeable someone is about a market, passion has to fuel it, because without it I would have sticked to ‘running the numbers’ instead of staying up till 2 am on a sunday night to get better at all the things I have no experience in. And that ultimately leads to better market and product fit for an entrepreneur.

http://www.cdixon.org chris dixon

Great story- thanks.

http://twitter.com/aktxt S. Anil Kumar

@cdixon:twitter : Reading your post, I was reminded of related points that @fredwilson:twitter made some months ago: http://p365.in/m7otjO

http://www.cdixon.org chris dixon

Yeah, Fred makes a lot of similar points. Thanks for the reminder.

Anonymous

This is a great point. Mark Suster and Steve Blank have made the best arguments I’ve seen on the importance of being passionate about your work. It’s pretty logical really… if you’re passionate about something, you invest a lot of time to the topic because – gasp – it’s enjoyable. The natural progression from there is domain experience.

Passion is also why smaller companies can take on behemoths that are trying to solve the same problem: one company is made up of passionate individuals who want to solve a problem, the other division is made up of suits who need to deliver a return. Pretty different motivators.

http://www.hypedsound.com jonathanjaeger

Yup. I remember Mark Suster talking on his venture capital podcast how he ended up running a company he wasn’t passionate about. He even skipped out on doing startups at the beginning of his career and opted to move to Europe. “Choose life.”

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http://www.sixstringcpa.com Geoffrey

Wonderful post Mr. Dixon. A couple of key comments that really registered with me:

“No one is born with knowledge of the education market, online
advertising, or clean energy technologies. You can learn about these
markets by building test projects, working at relevant companies, or
simply doing extensive research.” I loved that bit because it was so inclusive. Anyone, no matter what role they are currently in makers/builders, employees, or researchers/educators can go after it and obtain knowledge necessary to build a business that fits a market need.

Also really liked the nod you gave to knowing and embracing weaknesses, even going so far as to make lists. I had a college professor that shared a quote with the class I remember to this day (have co-opted it):

“My strength is I know my weaknesses but my weakness is I know my strengths”

Again, cool post.
http://ctndigital.com Jeff J

Ditto that. If you need a Rocket, get a rocket scientist as opposed to making any attempt to BE a rocket scientist. I encounter way too much amateur reasoning in “Rocket Surgery”.. shallow thinking where targeted skills are needed , even if for only a short period in the process. End Game focus where playing the real game goes ignored until forced into it… which is usually the “pivot” that should have been the focus.

Anonymous

Double ditto – passion=energy to work, work+alignment=progress. See Caterina’s post. Guesting on iPhone
Anonymous

Double ditto – passion=energy to work, work+alignment=progress. See Caterina’s post. Guesting on iPhone
Anonymous

Double ditto – passion=energy to work, work+alignment=progress. See Caterina’s post. Guesting on iPhone
Anonymous

There is a sales managerwthod called The Empty Chair ( I think ). It says: the rep in that chair will…….and success will follow.

Understanding the nature of the business that capitalizes on the opportunity is often overlooked. It Market / Co. Culture & Philosophy / Founder fit that creates powerful alignment.

IMO it is rarely designed – it just occurs organically. It should be assessed & designed in every startup.
Anonymous

There is a sales managerwthod called The Empty Chair ( I think ). It says: the rep in that chair will…….and success will follow.

Understanding the nature of the business that capitalizes on the opportunity is often overlooked. It Market / Co. Culture & Philosophy / Founder fit that creates powerful alignment.

IMO it is rarely designed – it just occurs organically. It should be assessed & designed in every startup.

Anonymous

Personality type plays a big role.

I know some founders who love being in a startup. They are completely out of sync with the culture required for their company to be successful. The founder’s personality is actually the biggest brake on progress.

Most typically, these are finance ‘deal-based’ (trying to be polite here) founders, trying to build service based businesses.

Love is less helpful than alignment.
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http://twitter.com/L1AD LIAD

Alongside making a list of things in which they have no ability – they should also be a list of things in which they have no interest. Oftentimes thats a bigger predicator of success

http://www.cdixon.org chris dixon

Very true.

http://blog.patternbuilders.com Terence Craig

Chris,

Great post – and one that desperately needs to be heard in the valley. Having been in the valley for longer than I would like to admit, I saw a lot of the passion leave in the 98 bubble. Suddenly, instead of talking about what they were building, people talked about how much venture they raised and which investor they were best buddies with. Founders became focused on what was fundable and not how they wanted to change the world. Thankfully this new bubble/natural regrowth/new renaissance (take your pick) seems to be reversing that trend. Its cool to be passionate again. And its passion that will lead to better products, more innovation, and better exits. Which is a win for founders, investors and society as a whole.
http://giffconstable.com giffc

Good post Chris. I’ll add that I think there are dangerous mythologies that play here. In some cases, the learning curve for how to do a tech startup is higher than industry knowledge, in some cases it is the reverse — the key is being thoughtful about the context rather than using shallow “pattern recognition”. Passion and experience comes wrapped in many packages, and investors can get a little superficial and/or misguided in their expectations of what a founder should look like for a particular company.
Anonymous

Awesome post/concept! I wrote something similar about the time leading up to product/market fit, called simple-product/sub-market fit. http://alexandermimran.com/55679160

It works along-side founder-market fit but tackles the problem of going after a large market: You’ll most likely want multiple (and more niche) product/market fits until you have matured and can go after the big one. Very dependent on market size and type, but using founder-fit as your primary filter for choosing that market makes a lot of sense…
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http://twitter.com/comster Jeff Pelton

If I were a VC, listening to a founder(s) seeking funding, the first thing that comes to mind is “WHY are you in this business & trying to solve this problem?”

Motives and passion drives everything.Thanks for this post, as lots of people miss the very important first step of trying to solve your own problem.

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Your mouth say tru! You exactly conveyed the my idea! I see you has the same increadible mind as me!

http://goteamspark.com chrispa

re: founder fit being overestimated. Very similar to the views discussed in the series of ‘E-Myth’ books by Michael Gerber. Basically the idea that just because you love to bake doesn’t mean you would like (or be good at) running a bakery!
http://twitter.com/heathr heather gold

It’s interesting how many of this points apply perfectly to social justice organizers who are willing to do something different or personally risky to have an impact. Larry Kramer, Harvey Milk, Cleve Jones, Del Close and Phyllis Lyon and MLK all come to mind. They are high profile names but I’m sure there are even more whose names I’ve never heard of who figured out how to reach and connect people.
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http://www.facebook.com/t.brian.jones T. Brian Jones

founder/market fit accelerates discovery of product/market fit.
http://twitter.com/spoppe steve poppe

Not sure I agree completely. A good marketing person can help a founder find the product sweet spot, thereby letting the founder found. Problem is, genius founders don’t always listen to those with a sense of where the market is and where it can go. Drive is great. Direction is a wonderful compliment.

http://twitter.com/goAugmented goAugmented

Amen to this Steve – when you bring in a marketing person the whole world changes and opens up – we have just been through this very process.

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http://www.marketing-startups.com Conrad Egusa

Great post Chris! I agree completely with everything you wrote.
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Anonymous

It’s amazing that this post came out the same day that I was talking with another tech person about marc andreessen’s market fit post from way back. The other tech person said we are living in a collective thinking time- where everyone is seeing the same things and thinking about the same things. I’m going to write a post about that on my blog. Great post here.
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http://florianfeder.org Florian Feder

Hi Chris – I just sat through a two-hour meeting (Banks tend to have those). My mind wandered off and I started thinking about applying the “product/market fit” theory to Hunch. Here’s a market that you may or may not have considered yet: News.

The problem is that although traditional news media are still very good at what they do (the NYT for example), most sophisticated users don’t rely on them exclusively anymore to get their daily news, as they did until about 10 years ago. Driven by the low cost of publishing online, many new sources of news and commentary have sprung up that often provide very high quality service, but only on a very narrow range. They can compete on a small range, but never with the NYT’s broad range of reporting and commentary.

Following all these news outlets, however, even if done with a news reader like google news or via twitter, is impossible for most sophisticated consumers of news – even because they don’t have the time or because they are not even aware of the various sources of news that are out there (like experts’ blogs, etc.).

Longreads.com has had significant success in providing a digest of sophisticated reporting that has been published throughout the prior week. It uses an expert-editor type approach mixed with some crowd-sourced suggestions.

Even better, however, would be a news aggregator that compiles news pursuant to my “taste-graph”. This would be a product that parses all possible news sources and compiles a digest that has been tailored to my taste by Hunch’s algorithm.

What do you think? Has anybody used the Hunch API to do this already (has this “product/market fit” already been explored)?
http://twitter.com/statspotting StatSpotting.com

This is one that might work – focus on the market that you are part of. if you are a student, build something for students. if you are a teacher, build something for teachers.
http://twitter.com/goAugmented goAugmented

I love this idea – so much so that I blogged about it – but more importantly it has explained why our tech director left us in the lurch (he didnt love the market) – and what we will do next – so thanks for that
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