Who should read “Marc Andreessen on product-market fit for startups”:
If you are a startup founder, interested in understanding product-market fit and its key components, read on. In the article, we will discuss what they are and where should you start building your startup and your assets so you can achieve product market fit and scale 🚀.
TL;DR
At the end of the day, for a successful startup, you need three things:
- A good team capable of making the right decisions,
- a good market that understands your product,
- and a product that actually delivers value to its users.
If you have that, there is no limit to where you can go. You can bootstrap, go venture capital (vc) way, or Family office, the sky is the limit.
Unpacking product-market fit
In today’s blog, we will be talking about the creator of the product-market fit model. The one who created the holy grail of startups. And we’ll analyze what he says is KEY to achieving product-market fit.
By the end of this blog, I’ll share a template exercise you can do to improve your customer acquisition and build your dream silicon valley startup:) but let’s start with this.
The influence of Marc Andreessen in startup culture
Partly, I blame Marc Andreessen – the creator of the product-market fit model, for the bad statistics the startups get. Not properly defying product-market fit, not specifying the metrics, even the name, I think a lot of it is because he named the model product-market fit, so we get all tingly and excited about products, where it should be called value-market fit, and so maybe the founders would be looking for the value first.
As a creator, he didn’t do a great job of guiding us to product-market fit, did he? He created something and said, deal with it. “Now you go and do things, and I’ll go and make some tea.”
Anyway, Marc says that the key to product-market fit isn’t the product; it’s not even the team that the investors are so interested in. It’s the market. He claims that the market is the most important thing when building a startup. And I partly agree. If there is no market need, if people don’t want your solution, your solution is doomed.
Finding Value in Every Product
But… And it’s a huge But. I have yet to see a product that has no future at all. In almost all of my cases with clients, we find a benefit in their product that a customer segment values. We can use that to position the product and gain traction.
So, even the market is not entirely to blame. Because it’s almost impossible that you have made something so useless, that nobody saw any value in your product.
Let’s dive deeper.
The Three Pillars of Startup Success
There are three main components to a successful startup.
- The product,
- the team,
- and the market.
Let me quickly stop your thinking. The product is not the most important thing when it comes to successful startups. In fact, I would argue is the least important, and I’ll get to that later.
The VCs are mostly looking for good teams. They say that a good team will find a good market and create a good product for that market.
Marc Andreessen argues the market is the most important thing because in a good market, the product can be crap and it will still sell, while in a dead market, even a great team and a great product don’t work.
Which, for me, is true. In the short term. In the short term, the market dictates whether your product will sell or won’t sell. But,… and here is where I don’t agree with Marc Andreessen: in the long term, the market is switchable, and a good team will outperform the market.
Let me explain.
Case Study: Repositioning for Market Fit
One of my clients was in the educational space. An educational Chrome extension that helps you improve your English – so a language learning extension. The EdTech space is a complex place and a difficult market to sell in. The team was struggling to attract, convert, and retain users. When I came into the company, we did the product analytics and looked at the user interviews the team did, and we quickly saw there are three types of users that we have.
Some users hate our guts and write bad reviews on the web store, a large user segment that just doesn’t care; they use the extension but aren’t prepared to pay for the product and a segment that immediately understands the product and immediately converts.
So, our solution was to understand who these people are and how they see the product. We found that these people don’t use the extension to learn the language but as a productivity tool. They basically were using the same features the product has but with a different use case altogether.
So we repositioned the product from a language learning tool to a productivity tool, basically going from: “Improve English as you browse” to “Expand your English vocabulary, boost productivity, and perform better at your job,” and immediately gained 12 times more people into the product.
BTW, if you want to craft a really good value proposition that attracts clients, here is a template. Go to this link and do the exercise.
Anyway, looking at Marc Andreessen’s theory, that said the market is the most important one – we switched the market. The market we were in – EdTech is difficult and slow, but productivity apps do great.
The same thing with Apple’s VR headset. Apple Vision Pro is basically a VR headset. But the VR market is stagnating, and I can tell you that from first-hand experience because my first startup was a VR studio.
Anyway, think of it like this: VR is not a good market to be in. So, Apple positioned the product under a “spatial computing” category. So it’s a computer, not a VR headset. Removing themselves from a bad market and creating a new subcategory. (Don’t do that if you aren’t Apple). The product is still the same. But they anchored their positioning differently. So they switch to a more favorable market – which is computing and has been trending since COVID-19, as opposed to VR, which isn’t.
So I would argue that the most important thing when it comes to building your startup is to be adaptable.
Conclusion: The Triad of Startup Success
At the end of the day, you’ll need all three. A good team capable of making the right decisions, a good market that understands your product, and a product that actually delivers value to its users.
If you have that, there is no limit to where you can go. You can bootstrap, go venture capital (vc) way, or Family office, the sky is the limit.
