As a seed stage investor, our fund is looking for great founders and teams to back that rarely have product/market fit.
Today, it sounds like a no brainer that Robinhood, Kustomer, Narvar and Wag, explosive growth companies in our portfolio, have product/market fit, but at the time of investment there were no users or customers. When you invest at the seed stage you often have to project product/market fit from your own experience and/or gut.
But of course, the most cited description comes from this passage in Marc Andreessen’s 2007 blog post:
“You can always feel when product/market fit is not 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 is 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.”
For me, this was the most vivid definition — and one that I stared at through tears.
We had set up shop and started coding Superhuman in 2015. A year later, our team had grown to seven and we were still furiously coding. By the summer of 2017, we had reached 14 people — and we were still coding. I felt intense pressure to launch, from the team and also from within myself. My previous startup, Rapportive, had launched, scaled and been acquired by LinkedIn in less time. Yet here we were, two years in, and we had not passed go.
Today, Superhuman is growing fast and gets rave reviews from everyone who uses it (my partner Gary lives on it). I am happy for Rahul, his team and the investors, many who I know (full disclosure – I am an LP in a fund that is an investor).
Every founder and seed stage investor should take the time to read read Rahul’s story and explanations in full and share it with their network of founders.
These are the types of articles from the pain and experiences that, when shared, can make us all smarter and hopefully a little more successful.