Finding your founder/market fit

Hiro Maeda of Open Network Lab talks about how startups find their founder/market fit.

We have gone through five classes of startups at Open Network Lab, and in every class we always have at least one startup where their mission is to find a new idea. The new idea has to target a market that the founders are most suited and equipped to entering. David Lee calls it “founder/market fit,” where the founders have deep domain expertise of the market they are entering and they “personify their product, business, and ultimately their company.”

Paul Graham says that the very best startup ideas tend to have three things in common: “they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing.”

It amazes me every time how much a startup can accelerate when the founders find their founder/market fit. In fact, our top three high growth startups are companies that scrapped their original idea and spent time looking for their fit.

The fit is often realized after a repetition of talking to their potential customers and getting feedback. Throughout the process, founders would recognize a pattern and it would just “click.”

When we guide our companies to find their fit, there are mainly three things that we think about.

What has the founders experienced? – A lot of great ideas come from inefficiencies or opportunities the founders have realized from their past jobs and experiences. Usually it is an insight that few people realize.

What will keep the CEO busy? – We’ve realized the the growth of a company highly correlates to how busy the CEO is.  There are two startups that had engineer-driven consumer products. Both CEO’s had a business background and were top-notch hustlers, but they don’t code. As soon as they shifted their target market and pivoted to a business-driven enterprise product, their growth rate has accelerated immensely and now they are out hustling and closing deals.

We realized that consumer products with high growth are built by CEO’s with technical backgrounds, and great enterprise products are ran by CEO’s who are hustlers who can close. Also interestingly, great commerce startups are ran by CEOs with business backgrounds who are extremely analytical.

What are they passionate about? – What is it that keeps the founders up at night? Doing a startup is hard and it takes a long time. In the video below Steve Jobs says, “If you don’t love it, you are going to fail.”

We have seen several companies that didn’t make it through our program because of the misalignment of passion between the founders. All of the founders have to be equally as passionate about what they are working on. If any of the founders compromise for the other, it usually ends up in a break up.

The founder/market fit is an extremely crucial step in a startup’s lifecycle. Moving on to the next step prematurely can waste months or even years. So find the fit.

About the author

Hiro Maeda is managing partner of Open Network Lab, a seed stage investment program based in Tokyo. Hiro also invests in startups in the US on behalf of Netprice.com.

Imaged Credits: Endeavor Global