Seems that these days everyone is talking about Product Market Fit. That magical moment when “you know you have it” or “your customers would be very disappointed if you didn’t exist”.
But PMF is hard and no matter what process you use it’s an elusive concept. It will take time and you will get stuck. So before you start thinking about that, there’s the prerequisite you, the founder, are the right person to take on this challenge. Founder market fit. Perhaps the most important, yet under-appreciated, part for the success of the business. It’s not a frequent topic of conversation. Early stage investors though do understand this and as such they want to know at least two things:
- Is this founder technically equipped, or even better “the only one”, to execute on this problem?
A perfect example would be Patrick Brown, from Impossible Foods. A professor in biochemistry decides to start a plant based burger which tastes and feels like real meet and to do this he will produce a lot of heme from plants.
The whole business is based on a scientific insight only someone with this background could have had, recruit a team for and execute on.
- What is driving this person? How do we know they will keep on going when things get hard?
Once more, Patrick Brown. To come up with Impossible Burger, Patrick took an 18-month sabbatical to think where to focus his energy on and decided starting this company is the best way to go about protecting the future of the environment.
Not every case is so clear cut. Very often a founder will stumble in an industry as a customer or have an itch they’re trying to scratch themselves. And then there’s a need to assess how well that person (you) can operate in this industry. Is it a good fit for you, the human?
More often than not, we get excited about the idea, the product, the customer and don’t examine the long term match of the person in a particular market.
However, if you are starting a business and you’re going to dedicate years of your life in, you better make sure the every day life in your chosen field adds rather than drains your energy.
A fundamentally wrong argument that can mislead is to think you will love the process no matter what. Yet the process is not an esoteric task; rather it’s a by-product of the market you’re in.
It’s not obvious and easy to confuse. For example, you might think that a mechanical engineer would be a great fit for the automotive industry: (s)he has the credentials, the quantitative background and might see solving hard problems as their mission and hobby but: how would every day look like? Would they thrive socially within a manufacturing culture ridden by safety and regulation? Is is possible to work remotely? What about dressing in a particular way? How does that affect the rest of the day? This might seem trivial from the outside but it’s every day. And “every day” follows the magical trajectory of compounding.
With that in mind, here’s some thoughts on areas to research to conclude whether you’re a fit for a given market.
- Market dynamics: What’s the market currently like? Is there fierce competition already? Is it a rapidly growing and nascent or boring old market?
Depending on the state of the market you may have the ability to stay in stealth or need to go loud and quick. This implies a whole different setup, day to day life and organizational structure.
- Business model: Your business model is not your revenue. It encompasses all the exchanges between people and systems to create (product), deliver (marketing) and capture (sales) value. As such, the founder’s obsession needs to serve the business model. When Jonah Peretti decided you start BuzzFeed he was deeply interested in the mechanics of why people share content. Or take Ray Kroc of McDonald’s. Relentless in the pursuit of opportunity and deal making. A salesman by nature, he grasped the potential of expanding McDonald’s from a nifty restaurant to a global phenomenon by selling to franchisees that involved constant, rutlhless deal making. Now imagine if they ran each other’s business. Not so obvious, right? Is the problem the business requires the one you’re inclined to solve?
- Key activities:
Then depending on your business model, you will have certain key activities that are not to be underestimated. These are the things that will actually occupy your day to day. For instance, running a sales driven business is fundamentally different than an engineering one. HR. Culture. Metrics. Discussions. Amount of deep work. Everything is different. In a Sales driven organization you get shorter reward loops and morale is crucial. Communication is necessary, managing expectations too. And to run a top tier sales organization you will need a formula for your people, very aptly described by Marc Roberge in this book. On the other hand, if your business is engineering led things might be different. You will need to expect long reward loops, perhaps with no rewards for a long term, intellectually challenging conversations constantly and an analytically driven mindset to prevail constantly so that product quality is maintained.
- People and culture of the industry:
And finally, the people and culture. Say you like finance. Do you like financiers too? Getting to like the people you will be selling or working with might be the most important thing. If you don’t enjoy your interactions, even if they’re minimal it is bound to cost the business. At the end of the day, businesses are a bunch of humans together and each business shares its own culture, rituals etc. Here’s a real life example when things went awry. A friend was part of a prestigious incubator. Built a SaaS business in the fashion industry. The business case was there. The salesmanship too. But the business didn’t take off. At the time, him and his co-founder were not even clear why. After the dust had settled and time had passed they told me: “It was impossible to get our point across. They didn’t get us. It was really frustrating”. Currently, the two of them have taken on a new business with great commercial success in another industry – oil and gas. It turns out that selling to geotechnical engineers and governments (!) was easier to them compared to selling to the fashion industry.
So, ask yourself: will you be happy in your market of choice, given the necessary responsibilities and the people that come with it?
If not, then you have a problem. In fact, I would argue it’s such a problem you should choose to focus on another business, one that feels like a great fit.
How to solve Founder market (un)fit
Still want to go in? In that case, here’s some suggestions:
- Find a co-founder that is deeply entrenched in the industry. If the market you’re in is not one that is a great fit for you, you can substitute some of the problems by getting a co-founder or senior executive to work alongside you. To open doors, develop relationships and generally do all the things you dislike. Usually, it will someone more senior with experience and an interest to join a smaller company and of course you will need to be very persuasive because these people are hard to come by.
- Get Social proof.
Start with investors. Now you don’t just need money, you need smart money. In this case your investors are signalling to your market that you are important and worth listening to. Are you in Oil and gas? Get BP to invest in you.
- Get influencers and create thought leadership.
Then you invest in thought leadership. If you can’t be the voice, use your resources to befriend those that are and get endorsements.
Conclusion? It is going to cost, will feel uncomfortable and will place higher demands on you. The need to fundraise differently, hire differently, grow a larger team and a brand early on etc.
There you have it. Founder market fit. It can make or break your business so ask the hard questions and ask them early. In the end, you need to feel good to perform well.