Starting a High Tech Business: Finding a Market


When you're starting a business, you'll hear a lot about product/market fit. Marc Andreesen says:

In a great market -- a market with lots of real potential customers -- the market pulls product out of the startup. The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along. The product doesn't need to be great; it just has to basically work. And, the market doesn't care how good the team is, as long as the team can produce that viable product.

In short, customers are knocking down your door to get the product; the main goal is to actually answer the phone and respond to all the emails from people who want to buy.And when you have a great market, the team is remarkably easy to upgrade on the fly.

This is the story of search keyword advertising, and Internet auctions, and TCP/IP routers.

Note: I've quoted a small portion of a long article that is well worth reading.

This is undoubtedly true, but one of the mistakes that many people make in reading statements like this is thinking of "markets" as these things that you can go find, check out, and pick up like a head of lettuce from the supermarket.

In truth, there's no static collection of markets. Further, they're remarkably difficult to analyze and understand to the level of details someone does when they're building a product. In fact, there's only one sure fire way to explore a market and that's to build products and try to sell them.

This is a state space exploration problem that evolutionary algorithms are great at exploiting and on the macro scale, that's exactly what happens when thousands of companies build and sell products. They find the fit.

Of course, if you're starting a business, you don't want to solve the problem on a macro scale, but on a micro scale. Specifically, you want to find a market for your product, or a product for your market depending on how you look at it. And that's the point. You can't afford to look at it from either of these perspectives. You have to consider the problem holisitically.

That's why people make such a big deal about having a good team. A good team, with strong leadership will constantly adjust product and strategy based on signals that are coming back from the world (I specifically don't say "market") about how well their product fits a need.

Consequently, it's difficult to say that team, product, or market is paramount in building a startup. The truth is that you need all three and successful startups are constantly iterating all of them. If you're not getting traction, you'd better adjust and quick. You'll never be smart enough to look at the market, see a need, and build a product that fits, although you may get lucky. What you can do, however, is quickly iterate through variations on a theme to find what works.