
The Pmarca Guide to Startups, part 4: The only thing that matters - abstractbill
http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html
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paul
What he refers to as "market" is a lot of what I think of as "product".

Really, how great is your product if nobody wants it? And how great is your
team if they don't adapt whatever they are doing to build what people want?

I can imagine a lot of technology people falling into this trap though. They
think that they've invented some great new technology and now they just need
someone to make a product or license it or something (maybe they aren't sure,
but they are certain that the technology is revolutionary).

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pg
I agree. I think Marc is using "product" in a strange way. Maybe he means
quality of implementation or something. What he's basically saying is that the
only thing that matters is to make something people want. This wanting he
calls the "market." Which is also a bit confusing, because most VCs use that
word to describe the total number of users your product could serve. "Market"
in the usual sense is not so much a determiner of whether you succeed as an
upper bound on the size of the success if you do.

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pmarca
I'm not sure I'm being that strange :-). At a certain point it just becomes a
semantic debate, but let's try:

\- Product -- the thing that gets built. Let's assume there is one
customer/user of it who finds it relevant to his needs. That customer/user is
evaluating it on how fast it is, how reliable it is, how many features it has,
how extensible it is, what platform it runs on, how easy to use it is, how
polished the UI is, etc. That's that customer's view of product quality.

\- Market -- how many users/customers are there going to be like that? A
dozen, a hundred, a thousand, a million, a billion? How hard is it going to be
to get to those customers? How much will it cost to acquire them as
users/customers? How long will it take them to use/buy? That's the market
question.

Yes, you're right, the point is that you need to make something that people
want (or, more precisely, that lots of people want, if you want leverage).

Yet the Valley and the industry is filled, and has been filled for 30 years,
with very smart people building great products (as defined above) for very
small markets.

The classic example is the huge universe of ISV's for marginal platforms. Ask
anyone who tried to succeed as an ISV for the NeXT box, BeOS, the Amiga, etc.
what the difference is between a high-quality product and a great market, and
they'll certainly be able to tell you. Hell, most (not all, but most) Mac
ISV's had this exact problem over the last 20 years.

I see this kind of thing _all the time_ in this industry.

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lupin_sansei
"There is one high-profile, highly successful software entrepreneur right now
who is burning through something like $80 million in venture funding in his
latest startup and has practically nothing to show for it except for some
great press clippings and a couple of beta customers -- because there is
virtually no market for what he is building."

I wonder who that is?

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staunch
It's obviously risky to go after hot markets, even though there's a lot of
success to be had doing it. Joe Kraus says "Better to be a trendspotter than a
trendsetter" and Marc is saying something like "Make something people want, in
a really hot market."

So does the advantage of working in a hot market outweigh the advantage of
solving a problem you personally have? I'm thinking it probably does. If you
can make it past the initial hurdle on your own steam your "hot market" users
can probably carry you to victory.

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JohnN
What he is saying is not about "hot" markets, he says big markets. There are
lots of "hot" markets that are not particularly big imho. For example
videocasting. Then, there are big markets, that were not so hot, e.g. browsers
around 2002-5. Before Firefox anyway.

If its hot, you probably have already missed it.

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staunch
That's might be a good distinction. He did say "red-hot markets", but he
mostly described a "great market" by its size, growth rate, and sales costs.
That's what I had in mind but you could also interpret hot as meaning hype.

I'm not sure I'd agree that you've missed a market just because it's heavily
hyped though. The blogging world still has sizable disruptions and is largely
unexplored. Facebook is a late entry to social networking and it's doing okay.

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pmarca
Yes -- I think my use of the term "red-hot" was misleading -- in my post I
meant "huge and growing".

Agree with second point also -- big markets often get a lot bigger, and
provide a lot of opportunity to new entrants. And sometimes they're heavily
hyped along the way.

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mynameishere
I guess it's needless to say: The team is the most important part of a
company, by a factor of...well, by an incalculable factor. A good team can
change product-focus, change market-focus, create products, occasionally even
_create_ markets.

A bad team is hopeless and will stay that way into perpetuity.

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pmarca
Actually, it's remarkably easy to upgrade a bad team when you have a great
market.

Cisco.

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gyro_robo
Condensed version: Making money.

Edit: No, really. _"Because, really, what else could it possibly be?"_

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motoko
You're right.

"The #1 company-killer is lack of market." is a euphemism for "when nobody
buys what sells, you go out of business."

What else does the "The only thing that matters is getting to product/market
fit" mean much more beyond "The only thing that matters is making money?"

