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Hey everyone... I was eager to get your collective feedback on this term I have been reading about, "Product Market Fit." I first learned of this term after reading Sean Ellis' articles. However, it is Marc Andreessen, co-founder and General Partner at Andreessen Horowitz, a VC firm, which focuses on the tech industry, who once stated the following, which is really what is causing the most confusion for me.

Andreessen stated - "We don't believe there is a tension between product and business, we believe there is a staging. Which is, in this industry, you don't have a business until you have a product. In particular, you don't have a business until you have a product that a lot of people want. We have this concept we call, Product Market Fit, which is basically, you have a product the market wants, and you can tell because the market is pulling the product. And until you have that, time spent building the business around the product, is pointless, because it's not going to go anywhere. Best case, it's going to be a zombie*."

When he states, "you don't have a business until you have a product…" I think I'm either taking his statement too literally or I am missing something. I recognize this post is getting long, but truly appreciate any insight you all may provide with respect to the following my observations and questions I derived at after hearing Andreessen's comments - - I feel that by focusing on the product first, the startup is being placed on a much deeper climb to the top. How can it scale and succeed? McDonald's hamburgers fit many markets, but that doesn't mean are sustainable in them. Without a team in place, an established company (if for no other reason than tax benefits and insurance policies), how can someone come up with a product? A concept, maybe…but a product? - He even goes on to state, "…until you have a product a lot of people want."

But, without a team and brand equity, how can you even tell people want it? - The worst thing we can do is try to solve for a problem people don't think they have. So, what is he stating here? How could people have known they wanted an iPhone until it was invented? He includes, "the market is pulling the product." If it doesn't exist…how can this happen? - And how can a product be validated without marketers and analysts who know what (and who) to survey? - As one, final point…pushing a product to market, despite its ease-of-use or how great it is (in theory) at solving for a pain point…without support services, how can a product truly be proven as a success or failure? What I mean is…if I create a great CRM, but I haven't a clue how to go about sourcing new sales leads…can anyone really quantify that the CRM is a success? *https://www.youtube.com/watch?v=zfOsP3PmI1U

  • SE

    Sean Ellis

    over 2 years ago #

    I definitely understand your confusion here - it can be pretty confusing. I think the key is that it is an iterative process. You create an MVP and introduce it to some people. You look for signal that someone likes it or hopefully even loves it. And hopefully a group of people. Essentially you're initially poking at the market. I don't think you need a marketing team to acquire this initial group of people. Founders should be able to hustle enough to do it.

    Once you feel like you have enough signal then you can start to push harder to scale. But you constantly need to be asking yourself if you have product market fit. If not, you could bankrupt the business trying to scale to early. According to a big startup genome project several years ago, this is the biggest cause of startup death.

    A counter example to this would be Paul Graham's classic essay "Do things that don't scale" http://paulgraham.com/ds.html . He outlines how a big push is often needed to get traction in the first place. And I agree that Apple iPhone was not launched incrementally and worked out great. But years earlier they launched Apple Newton and it didn't work out. So maybe it was a little bit of luck.

    It's important to also think about the audience that Marc Andreessen was likely targeting with his writing. He was likely targeting very talented engineers who often fall in love with technology for technology's sake. These people needed to hear that without a market for their product, they will fail. Of course marketers can benefit from the same advice. A marketer can take a big risk on a product that no one has ever used or they can help scale a product that is used by a few thousand early adopters. The sweet spot for marketers to get involved is when something has not been aggressively scaled but early users have validated that they love the product. In that case it largely comes down to execution risk. But if no one has tried the product, then you also run the risk that no one will ever really care that much about it. If that happens, you are setting yourself up for failure.

    I think this story that is currently on the trending page provides a great illustration of what product market fit looks like and how a founder was able to hustle to find it https://growthhackers.com/articles/success-story-of-america-s-pillow-king .

    • BR

      Brian Riback

      over 2 years ago #

      Sean...

      Thank you so much for your reply. I will be reading all of the links you shared. For the most part, this makes sense to me. I didn't really think about the fact that the product market fit happens several times. That part makes sense to me.

      But, here's the one outstanding question...what if your company's true competitive differentiator, is its service? I understand you don't need an entire team to demonstrate this value to customers...but from a documentation and demonstrative standpoint, with respect to investors...how can this be achieved?

      • SE

        Sean Ellis

        over 2 years ago #

        If your differentiator is service, you shouldn't need to scale to a lot of customers to validate this.

  • BR

    Brian Riback

    over 2 years ago #

    Thank you all. This is SO helpful. I have been thinking about this all weekend and really do understand this better thanks to you. I think Sean's point about it not being an exact science helps, as well. I think I often get so caught up trying to prepare what an investor would want to see, that I neglect to take ANY license with it and to me, that's a mistake.

  • SK

    Sean Kirby

    over 2 years ago #

    It's really about prioritization. You don't want to waste time and resources building out a full-fledged business based on assumptions. You build the business organically to fit your needs as it grows.

    You don't need all those support areas until you have a proven product. This usually starts small with an MVP. You see how your target market reacts and then iterate. Starting small is how a startup can do the things you mention. At first it's the founders who reach out and survey the market, find those fist paying customers, etc.

    Think about like this: which is the safer investment, spending money to scale a business around a product people love or spending money to develop something people might love while also paying a large number of business expenses and employee salaries?

    • BR

      Brian Riback

      over 2 years ago #

      Thank you Sean. I think I need to digest your response...it makes a lot of sense, but I want to apply it to the various points where I have concern.

      Allow me to ask you...you mention target market. Does this mean that you feel market validation comes before Product Market Fit? I know it may seem like an obvious answer...but, to focus on where the pain point is greatest and the sales cycle the shortest, don't I need the product to truly validate this?

      I appreciate the continued support.

      • SE

        Sean Ellis

        over 2 years ago #

        No, I believe market validation is part of product/market fit. You can't truly know if a market is validated until you have a product that works in it. So it doesn't come before. But remember it's not an exact science anyway. This stuff is pretty fuzzy.

      • SK

        Sean Kirby

        over 2 years ago #

        I wouldn't say that. I use target market because I feel it's easier to achieve product-market fit if you focus your efforts.

        Say, for instance you have a product that helps people get organized to be more productive. That could have a broad appeal, but the different aspects that would make it appealing would vary by segment.

        Consumers would likely use it differently than businesses. And even in the B-to-B space there would likely be differences among different industries.

    • HA

      Hammad Akbar

      over 2 years ago #

      @seankirby I really liked your point as to "Find the first paying Customer" and I totally agree with it. The basic theme about a MVP is to at least build something whatever resource we have got (at least it be presentable) and get out to the market where we can find the right people. If you sell out the first one means there is something people want and then find alike people to market. Then we could work on improving the product.

      The thing is to not to get foul in love of our ideas, as I mentioned here in my article: http://www.hammadakbar.com/entrepreneurship/dont-be-a-fool-in-love-guide-to-find-your-winning-tech-idea/

  • CJ

    Colin James

    over 2 years ago #

    I read a quote from Derek Sivers last night that applies here.

    He said "I believe you shouldn't start a business unless people are asking you to."

    I think this fits directly with Marc's quote here. For all intents, the 'product' he's talking about can be the idea or concept of a future product. If people are trying to give you money for something you haven't made yet, that's obviously ideal. But starting a business on a hope and prayer without either heavily supportive research (through iterations and real, unbiased testing) or preemptive demand is a losing proposition.

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