Original title: The only thing that matters

Original author : Marc Andreessen

Abstract: This article comes from a series of blogs written by a16z and Netscape browser founder Marc Andreessen in 2007, mainly Targeting topics related to entrepreneurs and VC. In the blog mentioned in this article, Marc Andreessen, based on his own experience and what he has seen and heard, points out that for entrepreneurial teams, the most important factor in success is not the team and product, but the market in which they are located, or PMF. (Product-market fit).

Since Marc Andreessen is a successful serial entrepreneur and has made notable achievements in the Internet and venture capital industries, we find his insights persuasive. In this regard, we have translated this blog into Chinese, hoping to bring some inspiration to the majority of entrepreneurs.

Text: This article is about the only important thing for a startup company thing. But first, we need to understand some theoretical foundations: If you observe a large number of start-ups, such as 30 to 40 or more, and try to eliminate chance and look for patterns, then you will find two obvious facts:

Startups vary greatly in their level of success - some are incredibly successful, some are highly successful, and many are just barely successful. There are also quite a few companies that fail outright.

The three core elements of a startup - team, product and market - vary greatly in level and quality.

In any start-up company, there may be some excellent team members and some with obvious flaws; some companies make products that can be called engineering masterpieces, and some products are engineering masterpieces. The market is barely available; and the market in which the company is located may be booming or it may be a sunset industry.

So we began to think: What factors are most relevant to entrepreneurial success - team, product, or market? Or to ask more directly, what are the determinants of success? For anyone who studies startup failure, what's the most dangerous thing about it?: A bad team, a weak product, or a suboptimal market?

Let us first define a few key terms:

The level of the team: CEO, How well suited are executives, engineers, and other key members to seize opportunities. When measuring teams, I focus more on execution than experience because the history of the tech industry is full of examples of first-time people building teams that turned out to be hugely successful.

Quality of the product: How attractive the product is to real users. Is the product easy to use? Is it feature-rich? Does it run smoothly? Is it easy to expand? How finely polished is it? Are there any defects?

Market size: refers to the number of potential customers/users faced by the product and its growth rate (assuming that the profit after scale is Feasible, that is, the customer acquisition cost is lower than the revenue brought by the customer).

Some people may question my classification: "How good can a product be if no one needs it?" Change In short, isn't the quality of a product determined by its appeal to many customers?

The answer is no. Product quality and market size are completely different concepts. A classic example of this is: many software applications are developed for operating systems that almost no one uses. Ask any programmer who has developed for BeOS, Amiga, OS/2, or the NeXT App Market what the difference is between a "great product" and a "huge market."

Priority of team, product and market

So, if you ask entrepreneurs or VC, for a start-up team, which one is most important, the team, the product or the market? Many people would say the team. It’s an obvious answer, in part because in the early stages of a company, you know more about the background of its team and less about the product and market—because the product isn’t finished yet and the market is often underexplored.

In addition, the education we have received since childhood emphasizes that "people are the most important asset." At least in the United States, the idea of ​​valuing people is ingrained in our culture, including self-esteem education programs in high schools and the "rights to life, liberty, and the pursuit of happiness" mentioned in the Declaration of Independence. Therefore, the answer "the team is the most important" sounds "rightCorrect".

But if you ask some engineers, they might say that product is the most important. For the technology industry, product is indeed the center, the mission of startups is to invent products, and customers buy and use products. Apple and Google are the most important in today's industry The most successful companies are because they make the best products. Without a product, there is no company. Imagine having a great team but no product, or a market with great potential but no product. What?

But personally, I hold the third view - I think the market is the most important factor in the success or failure of a startup. Why? Because in a huge market - a market with a large number of real potential customers , the market will push the product out of the startup. The market has a demand, and the market will be satisfied. As long as the first viable product emerges, it does not need to be very good, it only needs to be basically available in the market. It doesn't matter how good the team is, as long as the team can deliver a basically usable product.

In other words, customers will come to you to buy products, and your main goal is to meet customer needs and deliver products. Even in a market with huge potential, the level of the team can be achieved. Improved spontaneously. For specific cases, please refer to the search engine, online auction platform and router market.

Conversely, in a bad market, even if you have the best product in the world and an absolutely brilliant team, you're going to fail. You're going to waste years trying to find customers that don't even exist. , your talented team will eventually become demoralized and quit, and your startup will collapse. See the market for video conferencing, workflow software, and micropayments.

Rachleff's Rules for Entrepreneurship Success

Andy Rachleff (formerly a partner at Benchmark Capital) once summarized the following point of view:

When a good team encounters a bad market, the market will win.

When a bad team meets a great market, the market still wins.

When a bad team meets a great market. When an excellent team meets an excellent market, miracles will happen.

The market is the decisive factor in the success of a startup, and a bad market environment cannot be saved by a great team or a great product. You can screw up a great market - it has happened, and Not uncommon - but assuming the team has basic capabilities and the product is basically acceptable, then a great market often equals success, and a bad market often equals failure. In the final analysis, the market is the most important, whether it is an excellent team or an excellent product. Can't save a bad market

The question is, for a startup team, what to do? First, since the team is the factor you have the most control over at the beginning, and everyone wants to have a good team, then a good team can actually What does it bring to you? Maybe a good team can bring you an okay product, and ideally, a great product. However, I can name a lot of times where good teams have screwed up the product. Example, the fact is, great products are really hard to build

Hopefully a great team will also bring you a great market - but I could also cite many examples of great teams doing great in bad markets, only to fail. A market that doesn't exist doesn't exist Will care how smart you are

In my experience, the most common combination of a great team with a bad product/bad market is a second or third time entrepreneur who had a huge success with their first one. So the founder started to become arrogant, and then made mistakes one after another. Suppose now there is a highly criticized person. A high-profile, wildly successful software entrepreneur who is pouring roughly $80 million into his latest startup, which is accomplishing little other than making news or getting a few test customers — because he’s There is almost no market for what is being built.

On the contrary, many weaker teams have achieved great success due to the huge scale of the business in the market. Finally, to quote Tim Shephard: "Under the same market and product conditions. , a good team can always beat a mediocre team. ”

Now we raise the second question: Can’t excellent products create huge new markets? In some cases, it is true, but this situation does not Not often. VMWare is the latest company to do this - VMWare's product was profoundly transformative from the start, catalyzing a new movement in operating system virtualization that eventually became a huge market .

WhenHowever, in this case, it doesn’t matter how good your team is, as long as the team can make the product meet the basic quality required by the market and bring it to market. I'm not saying that you shouldn't focus on team quality, or that VMWare's team isn't strong enough, I'm saying that as long as you bring a product as transformative as VMWare to the market, you will succeed, and that's it. Beyond that, I wouldn't expect your product to create a new market from scratch.

The third question: As a founder of a startup, what should I do? Let’s introduce Rachleff’s corollary for entrepreneurial success: The only important thing is to achieve product/market fit, that is, PMF. PMF means having products that can meet the needs of that market under good market conditions.

When there is a product/market mismatch, customers do not get enough value from the product, word of mouth does not spread, usage does not grow very fast, and the media Reviews were a bit "boring", the sales cycle was too long and many deals never closed.

When there is product/market fit, customers can place orders as fast as you can produce the product, and usage can grow as fast as you can add servers. Just as fast. The money your customers pay is piling up in your company account, and you hire salespeople as fast as you can. Reporters call because they heard about your hot product and want to talk to you. You start winning Entrepreneur of the Year awards from Harvard Business School, and VCs are watching your house and want to invest in your company. But in reality, many startups fail before product/market fit, and they fail because they never achieve PMF.

Further, I think the life of any startup can be divided into two parts: before product/market fit (call it "BPMF") and product /After Market Fit (“APMF”). When you are a BPMF, focus on achieving PMF and do whatever it takes to get product/market fit, including changing team members, redoing the product, entering different markets, doing your best to find users, or raising more funds - whatever you need .

When you are truly committed to the PMF process, you can ignore all other elements. Whenever you see a successful startup, you'll see that it has achieved product/market fit - and in the process, probably screwed up other things like marketing plans, media relations, compensation, etc. aspect. But that won't hinder the startup's success.

On the contrary, you will see that many well-run startups are perfect in all aspects, with perfect human resources, excellent sales models, careful marketing plans, excellent interview processes, delicious catering, and good service for all programmers. Equipped with a 30-inch monitor and a top VC on the board, it fell straight off the cliff because it couldn't find the point of PMF.

The irony is that once a startup is successful, when you ask the founders what made the company successful, they will usually list a variety of things related to Things that have nothing to do with success. It's difficult for people to understand cause and effect, but in almost all cases, the cause is actually PMF. Otherwise, what else could it be?