By Erin Scott & Scott Stern | Quartz | August 3, 2021
“The only thing that matters is getting to product/market fit”—Andy Rachleff’s corollary of startup success (as coined by Marc Andreessen)
Perhaps the single most common piece of advice given to growth-hungry entrepreneurs—by investors, mentors, and even professors—is that the singular focus for any startup should be achieving product-market fit (PMF).
Popularized by venture capitalist Marc Andreesen, PMF captures the notion that the ability to create and capture value from an innovation depends on iterative learning and experimentation to find a magic combination of customer and product. Among the endless number of markets that a startup might enter, and the endless number of products that an entrepreneur might offer, finding the right product for the right market is the most critical task of an early-stage startup.
But if getting to PMF is so important, why is achieving PMF so rare?
The failure to find PMF is not because entrepreneurs have bad ideas (or because they lack access to capital). Exactly the opposite. Tens of thousands of entrepreneurs each year are able to identify opportunities that at least in principle might be able to create meaningful value for customers. And a substantial number of those entrepreneurs are able to attract a founding team and seed stage capital to explore their idea in their search for PMF.
However, and perhaps counterintuitively, our research suggests that it is precisely because they are pursuing a potentially valuable idea that the search for PMF can be so challenging. Specifically, many entrepreneurs (and even mentors and investors) seek to achieve PMF by finding the “best” market for their product (or the “best” product for a given market); the search for PMF becomes an almost grail-like quest in which founders iterate and experiment toward an epiphany as to the one true path for their venture.
This approach contains a subtle yet critical logical error about the nature of entrepreneurial ideas.
A good entrepreneurial idea is simply a hypothesis that there is the potential to create and capture value by introducing something that is currently missing from the marketplace. The hypothesis may be about the ability to fill a small hole or open up a new vista. It may be something that is well-known but not yet implemented in a particular location or market segment, or it may be something that others have discounted until it was actually offered.
In all of these situations, there are many potential paths to value. While a good entrepreneurial hypothesis is “contrarian” (or else someone else would have already pursued it!), there will be many alternative ways to implement it if the underlying hypothesis is indeed true.