Sequoia's Jess Lee explains how early-stage startups can identify product-market fit | TechCrunch

Sequoia's Jess Lee explains how early-stage startups can identify product-market fit | TechCrunch

Founders in the early stages of building their startups may have already developed a strong solution, identified a gap in the market, or may have a compelling and driving motivation to build their business. . Ideally, they have a good combination of all three. But do they have product-market fit? And anyway, what exactly is product-market fit?

Investors at Sequoia, one of the world's largest venture capital firms, have developed a very simple framework to answer these two questions. It divides the landscape into three archetypes.

“Hair on Fire” It almost always means that your startup solves an immediate problem. For example, a security startup might fit here, especially if it can win early business on the back of parachuting in to fix an already ongoing breach or other problem. Or, think of the wave of companies that offered services to businesses and consumers when they were suddenly sheltering in place and working from home during the outbreak of CoVID-19.

“harsh reality” Translates as a startup that solves a pre-existing problem better. Square, which emerged as a new point of sale in a seemingly old and saturated market, is a good example.

Finally, “Vision of the Future” Related to deep tech, moonshots, and out-of-left-field products. These will include quantum startups, but also those building flying cars or even autonomous vehicles that will hit our roads (or any technology needed to build such vehicles).

They each have their own customer mindset, competitive market position, opportunity/general product goals, challenges, examples of people who got it right and who didn't, etc. Sequoia partner Jess Lee, an early-stage investment expert, gave a big talk on the concept at TechCrunch's early-stage event in Boston in April. Sequoia has written about the framework. Heretoo

In summary, the theory goes like this: Startups all, more or less, fit into one of these three archetypes, so identifying which archetype a company fits into helps focus and develop it. can be found

Sequoia is confident enough about the framework it uses. Arc program To help early-stage founders focus on how they're building. It also helps the firm to assess potential initial investment. Beyond that, and just as importantly, founders can lean on an archetype to better represent and articulate the challenges and opportunities in their space. This can be helpful for decision-making internally, of course, as well as for fundraising or partnerships or customers.

During his presentation on the framework, Lee said Sequoia doesn't have a favorite category among the three.

“I You seem to be able to build great companies in all of these categories,” Lee said. Still, he acknowledged that certain types of companies may find it particularly difficult to raise money in the current environment.

For deep tech and moonshots—two common types of startups found in the “future vision” category—fundraising “It was easier in the zero-interest period when there was a ton of capital coming in,” Lee said. “I don't know if (those companies) would have been able to raise as much (to start with) as they had to, so They can get to where they are now.”

Lee co-founded Polyvore, which combined social mechanics and e-commerce — its users contributed fashion and product clips from around the web and used those products to assemble mood boards, including Affiliate marketing underpins all of this. It was Polyvore. Eventually acquired by Yahoo., and she broke up with him. Still, e-commerce and consumer focus have stayed with her, she said, adding that she's interested in finding new winners in the category despite the challenges of trying to enter the space these days. .

“It can still be done,” he said. “I think a lot of consumer companies fall into the 'hard fact' category, and I especially like working with consumer companies. But you have to market your problem as well as market your solution and The construction of both should be good, so it takes a lot to get it right.

“It almost feels like alchemy. I can't tell you how many founders I've met who said, 'Oh, yeah, I was working on Snapchat too. Like, I had my own version.' And it looked like it was the same, but just the right number of details allowed Snapchat to stand out.”

None of this is to say that the third category, “hair on fire,” is at all easy. “You have to execute mercilessly,” Lee said. “(You need) So much speed to stay ahead.”

This results in one of the most important aspects of building an early stage business home run. “I think there's a little bit of founder-market fit that goes into each of these product-market fit categories.”

Jess Lee (T) Product Market Ft

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