The importance of the market when building a startup

This 100-day blogging challenge is getting difficult. Now, one or two days a week, I hit a writer’s block and just can’t come up with a topic to write about. This is a big reason why I have begun publishing notes on other content. I figure if I share notes on some of the best content I have found, it may be useful to others.

Well today I’m having writers block again. I’ve been thinking about the importance of the market in building a startup, but frankly, I don’t have anything original or interesting to add to prior blog posts that I have read.

So, I’ll just leave you with the best blog post I have ever come across on this topic by Marc Andreeson of Andreeson Horowitz. Some of the best parts paraphrase Andy Rachleff, formerly of Benchmark Capital.

When discussing startups, people tend to argue about the relative importance of the team, product, and market. Marc makes a strong case that the most important factor is the market. He then describes product-market fit (PMF), which is arguably the most important step a startup can take on the road to success.

IMHO, the most important bit is here:

The #1 company-killer is lack of market.

Andy puts it this way:


– When a great team meets a lousy market, market wins

– When a lousy team meets a great market, market wins.

– When a great team meets a great market, something special happens.


You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most.

And neither a stellar team nor a fantastic product will redeem a bad market.

And here:

The only thing that matters is getting to product/market fit.

Product/market fit means being in a good market with a product that can satisfy that market.


You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.


And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.

Again, you can find the entire article here, and I highly recommend it. If you have even more time, the Pmarchive contain a bunch of old posts from Marc Andreeson. They are some of the best reading you can find on building startups.

P.S. This is post number #73 in a 100 day blogging challenge. See you tomorrow!

Follow me on Twitter @alexshye.

Or, check out my current project Soulmix.

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