
True product-market fit is a minimum viable company - allenleein
https://medium.com/@amk/true-product-market-fit-is-a-minimum-viable-company-56adeb3e49cd
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unlinked_dll
My dad always told me the first rule of business is "know your customer."

I don't really want to rag on someone who's clearly more successful and
experienced than me but I read this article and I don't know what it's trying
to say beyond, "know your customer."

Another quote from him, "you don't know a market until you're in it."

It's impossible to tell what product market fit is unless you're actually out
there trying to fit something into it a real market. Like with the Lyft
example (as presented) screams to me like pure luck. How did they know the
market valued those things? How did they evaluate which elements had the best
ROI to get right, and how to prioritize?

I just feel like this article is shockingly light on insight. But then again,
we often need someone to smack us with common sense. On the other hand, most
smart people know when they're pounding a square peg into a misshapen hole.
The hard part is knowing what shape the hole is or if it even exists, and
that's the kind of content I wish this article had more of.

Tangent: is there a market for a book full of business-isms and one liners?
I've been pushing my dad to write one for years...

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jiveturkey
> My dad always told me the first rule of business is "know your customer."

Is your dad a prominent VC?

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ganzuul
"Delight is seeing your customer’s pupils dilate because they’re so ecstatic
about your 10x change."

IMO this kind of small-scale and shortsighted focus is holding SV-style
innovation back. Twitter has no route to profit (last I heard) but it is a key
factor in modern global events, for good or bad.

We need more Elon Musk-style megaprojects and fewer Facebook killers.

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gautamnarula
Twitter is currently profitable, and has been since sometime in 2018.

To your bigger point, I actually think nowadays we're finally seeing fewer "me
too" type companies--fewer knockoff social companies (early 2010s), fewer
"Uber/Airbnb for X" companies (mid-2010s), fewer hot air crypto companies
(late 2010s), etc. Granted I'm seeing a proliferation of "AI" companies so
that isn't to say that hype is dead, but I'm hoping we'll see something new
and innovative over the next few years.

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moron4hire
Everyone and their brother is still trying to start their own scooter share.

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jjeaff
With companies like scooter shares or Groupon, where expansion requires
physical presence and manpower, there is actually a decent chance of success,
assuming there is a 800lbs gorilla or two that is funded and clamoring for
growth.

Quite a few smaller, regional Groupon clones were able to sell to either
Groupon or living social for very hefty sums when the gold rush was still on.

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shrimpx
In my opinion, a successful startup proves a market exists, it doesn’t have to
fit a product to it. But it’s important to create IP relevant to exploiting
the market. A very successful startup demonstrates multiple angles on one or
more markets. A startup going for ipo can then go for fully exploiting these
markets. A startup going for acquisition will let the acquirer do that. The
acquirer is purchasing proof of market and relevant IP for exploiting it.

Basically, I’d say product market fit is mostly bs for startups. A great
startup will be a string of demos uncovering a market. Product market fit is
for maturing and mature companies to worry about.

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jariel
The underlying problem with the 'product-market fit' hyperbole is one of
degree.

1) Ok, so they like your product, but how much? 2) Is it that much better than
substitutes? 3) Really how big is the market? 4) Some will live it, some
won't, what does that ratio look like? 5) How much customisation did each of
those customers need?

This concept of 'product-market fit' is almost ridiculous frankly. In reality,
investors want to see a material 'lift off' i.e. in their investments they
want to see startups that have a product that is just 'taking off' and 'flying
out the door' ... but this is an excessively optimistic view of 'product
market fit'. By some SV definitions, most companies never had 'product-market
fit'.

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yowlingcat
Another day, another bloviating "think piece" written by a consumer VC. When
will we call out this content free garbage for what it is?

Minimum viable product, minimum viable company, all of these masquerade the
idea casino that many large consumer VCs function inside of which occlude
their mechanisms and numbers. Consumer VC is a historically poor performing
asset class that funnels pension money into lightweight marketing experiments
that enrich the operators much more so than the institutional asset holders
via the greater fool theory. The exceptions (Facebook, Google, etc) prove the
rule (WeWork).

By the way, let's take those two classes (FB/G vs WeWork) into consideration.
If you want to read a better article about corporate craft, read this article
[1] by a Two Sigma investor. The hypothesis is very simple: gross margins
matter, and it's challenging to build a company with defensibly high valuation
without them.

You'll notice that while Facebook and Google are high margin businesses with
giant valuations, WeWork raised on premises that were out of line with the
reality of their margins, and which were subsequently brought back down to
earth.

Build a company with high margins and taking on VC capital will become a
choice, not a necessity. That's the way it should be.

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shrimpx
You didn’t add the two sigma link.

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yowlingcat
My apologies. Here it is:

[https://twosigmaventures.com/blog/article/why-gross-
margins-...](https://twosigmaventures.com/blog/article/why-gross-margins-
matter/)

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zuhayeer
“If you’re unsure whether you have a strong value proposition, look at your
word of mouth”

It’s so difficult to track word of mouth because you can only see it as
unattributed growth on your product, but I definitely agree it’s probably the
single most important metric for P/M fit. One way to really know if you’re on
to something is if people start mentioning your own product to you not knowing
you’re the maker.

Luckily there are things like f5bot.com which are also greatly helpful!

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5cott0
I still don’t understand why VCs (or anyone else for that matter) consider
unprofitable unicorns “success”.

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jariel
Because either their unit metrics are positive, or they're grabbing market
share and can bring down other costs later, or more cynically, they can dump
shares on other investors while the hype is still going.

~~~
5cott0
None of those things are success.

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peter_d_sherman
Excerpt(s):

"When I reflect on the failures, the root cause inevitably stems from
misconceptions around the nature of product-market fit. _Founders are blindly
searching for growth because they see that as the proof of product-market fit
when in fact they should be focused on insight and customer development first
as that is more likely where product market fit will be found._ "

[...]

Lyft’s cumulative _delight_ overcame a customer’s investment within the
customer’s first ride:

o A rider was first _delighted_ when expecting a long lag time after ordering
the car… then realizing it will arrive in only 3 minutes!

o The second _delight_ was fist-bumping the driver — it felt like a friend
coming to pick you up.

o The third _delight_ was the interior of the car — it’s not a grungy, smelly
cab, but a normal car your friend might own.

o The fourth _delight_ was the ambiance (music, water) and chatting with the
friendly driver.

o The fifth _delight_ was the price, much less expensive than a cab ride.

A week into the Lyft launch, one of our associates ran into my office with his
eyes wide, shouting, “You have NO idea what you have on your hands. I’ve taken
6 Lyfts this week alone and it’s a GAME CHANGER!”

 _Delight is seeing your customer’s pupils dilate because they’re so ecstatic
about your 10x change._ "

