Dave McClure: Invest Before Product/Market Fit, Double-Down After.

http://500hats.typepad.com/500blogs/2010/07/moneyball-for-startups.html

by malbiniak • 16 years ago

64 12 16 years ago

500hats.typepad.com

mitchkapor• 16 years ago

Far and away this is the best, most comprehensive synthesis of how to approach tech startup investing for consumer Internet in the new era

joshfraser• 16 years ago

having taken money from dave, i can say this guy knows his stuff. i like his way of thinking about things.

ehsanul2• 16 years ago

So I was under the impression that "product/market fit" meant adapting your product to an existing market as early as possible, so you don't get stuck building the wrong thing.

For example, IMVU started out with the founders writing 40k lines of code or so to make plugins for AIM/MSN/etc chat clients. They then found out nobody wanted it, and did the market research and saw that people did want something else that was related. Then they built that and made lots of money. They hadn't worked on the product/market fit early enough. Perhaps I've got the wrong definition in my head about this "product/market fit".

kylemathews• 16 years ago

Sort of right. The problem is most startups don't go after existing markets, as there's already existing companies there. So startups try to hit an emerging niche in an existing market or even a brand new market. And it's much harder to discover a market do that then copy an existing product and market meaning during the initial life span of a company, much of it they spend floundering about trying to find "product/market" fit. So what IMVU did is very typical, they thought they understood their market, built a product to meet that market, and only then realized that their product didn't fit their market. When a company reaches this realization they can then "pivot" meaning they can either take their existing product and try to find a new market or take what they've learned about their market and build a new product.

ehsanul2• 16 years ago

Isn't "pivoting" a huge drain on a startup though? You throw away a few months of code and have to create another product. It just cuts into your runway, so much better to get the right product as early as possible, through early customer development.

mahmud• 16 years ago

WOW! What a great read. He comes out in prose. Personality galore!

Do yourself a favor and read it.

aristus• 16 years ago

McClure is smart and all, but the tone and formatting remind me of the timecube guy.

dirtyaura• 16 years ago

McClure's Tone and formatting make his writing so delightful to read. Internet writing needs more of that.

Unfortunately for us non-native English speakers, adopting an original writing style in English is not that easy.

dmor• 16 years ago

Anyone have thoughts on what this means for how startups might structure founder and early employee equity differently, given that they are going to take on a lot less capital and give up less of the company?

Dave McClure: Invest Before Product/Market Fit, Double-Down After.

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