Products Are Tactics
I care less about product everyday. I care more about people and markets everyday.
With seed stage companies, most everything is mutable. The founders are forever The Founders but the team will grow. The product will morph. And the name will probably change too. That this all happens is a good thing. It should be encouraged amongst both founders and company advisors. The best seed stage companies are creatures of learning. I’ve written about this before in a post on pivoting.
At First Round Capital, this is something we talk about a great deal. Every year, we review more than 2500 plans and presentations on ideas for new businesses. We typically invest in 20 new companies every year, but we continue to follow the development of many companies that we have chosen not to fund. While doing so is often humbling, this has allowed us to develop a tremendous amount of institutional knowledge on business building.
We recently carved out some time to review and discuss some of the data we have collected. This involved checking our old notes from company meetings and revisiting their original pitch decks. It’s a staggering exercise actually. Seed stage companies become successful through paths that nobody can imagine. Many of the companies which grew to be most successful, identified their initial market correctly but missed on the specifics. Often, they knew to target a certain type of user or community, but were off in identifying the growth engine of their business.
The currency of an early stage business isn’t revenue or profit, it’s learning. Products and features are tactics employed to test and reach a market vision. After our data review, I’m more convinced of this than ever. When product roadmaps are spec’d and fundraising is planned, they need to be done so with the intent of discovering what is and what is not working in a business. Every feature / pixel / byte is a chance to take another step to a market vision. When they don’t another tactic is needed.
The best entrepreneurs know this. I’ve seen the data.
Day by day, I’m learning the same thing from the other side of the table. Great post, and thanks for sharing.
This makes me feel better about where we are in our startup journey. As a founder, it’s pretty scary stuff to not have all the answers or to think that you might be wrong. We’ve made a number of changes and I have to believe that we did the right thing. Thanks for the lift!
Gabe
Hmm, seems I replied to Rob. Sorry all! Time for bed.
Thanks for wheiging in and I couldn't agree with you more Dennis. That's specifically why I mentioned the idea of getting a few advisors who are potential CEOs, it's a wonderful way to see how you work together.
For anyone interested in the topic of learning and pivoting, I would recommend checking out Eric Ries’ Startup Lessons Learned blog.
+1 Eric’s blog, as well as Steve Blank’s are the best on the topic. Eric’s blog is here: http://www.startuplessonslearned.com/ and Steve’s here: http://steveblank.com/
amen. finally. I’ve always though applying direct marketing principles (test and learn, iteration, speed) is the route to success in businesses. It’s refreshing to hear someone in an authoritative role affirm this convention. thank you!
Great advice. I agree completely with you. The fact that the possibilities of an emerging market offers are far greater than the possible impact of a great product in a stale market.
There could always be exceptions, but its mainly stadistics.