Today I am thinking about product/market fit.
Product/market fit is startup speak for being in a good market and having a product that satisfies the needs of that market. This may sound intuitive, but having the best product doesn’t matter if there’s no market for it. I like this line from Marc Andreesen: “Markets that don’t exist don’t care how smart you are.”
So the first takeaway is to create products that people care about. Sounds simple enough. But another reason why this is a thing worth talking about is that markets evolve and there’s always a chance that you can unlock a new market that nobody else is servicing. That’s obviously riskier, but it’s an ideal scenario.
Below is another way of thinking about that. It’s a quote from Andy Rachleff.
“Investment can be explained with a 2×2 matrix. On one axis you can be right or wrong. And on the other axis you can be consensus or non-consensus. Now obviously if you’re wrong you don’t make money. What most people don’t realize is if you’re right and consensus you don’t make money. The returns get arbitraged away. The only way as an investor and as an entrepreneur to make outsized returns is by being right and non-consensus.”
It’s a lot scarier to be charting new territory and sitting in the non-consensus camp. Consensus is comforting. But this is how the game works. I try and remind myself of this on a regular basis. I would like to say more, but I will leave it at that for today’s post.