How to Find Product Market Fit – founder of Segment (2017) [video]

The biggest thing that hits me this go round is that staying alive is key. PG may have said, you burned $500k and have nothing to show for it, but if they had quit then, they would never have made it through the Great Startup Filter(tm) https://en.wikipedia.org/wiki/Great_Filter. The lack of great businesses (90% failure rate) reveals that the hardest part of building a company is starting a company.

In earlier times when there was more low hanging fruit, the hardest part of starting a company was scaling it. You had to have government backing (e.g. East India Company) or sit in an important part of the supply chain (e.g. Standard Oil) or cover really high capital expenditure (e.g. FedEx). Now that it's easier than ever to start a company, the good ideas are mostly already picked, so finding one is harder.

In economics, this called the explore/exploit or multi-armed bandit problem. What is so interesting to me on this viewing is that Peter Reinhardt's unrelenting enthusiasm and self delusion were a feature, not a bug. There is no way they would have stayed in the game long enough to find product market fit without that. Even though the kernel of the idea existed early on, they needed to taste true desperation to humble themselves enough to do the simplest, stupidest thing that customers wanted.

I'm inclined to think that the best way to find fit is to make sure people are willing to _overpay_ you for services. For instance, I have a great deal of expertise when it comes to graphics, and I could probably insist on being overpaid in this realm.

If I could automate what I am overpaid for at scale I might have a business.