Identifying a compelling value hypothesis is what I call finding product/market fit. A value hypothesis identifies the features you need to build, the audience that’s likely to care, and the business model required to entice a customer to buy your product.

When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.

One way to rephrase a key point Rachleff is making is to say that that nothing is as irreplaceable as a great market.

Rachleff observes that if you look at the most successful startups, they actually didn’t have “the world’s best management teams in the very early days. They happened to have conceived, or more likely pivoted into, an idea that addresses an amazing point of pain around which consumers where desperate for a solution”

Rachleff observes that “First you need to define and test your value hypothesis. And then only once proven do you move on to your growth hypothesis. The value hypothesis defines the what, the who, and the how. What are you going to build, who is desperate for it, and what is the business model you are going to use to deliver it?”

the iteration is more about the market and the business model than the product itself.

Reid Hoffman notes, “Product/market fit requires you to figure out the earliest tells.”

According to Andreessen, “product/market fit means being in a good market with a product that can satisfy that market.”

Andreessen emphasizes that market matters most

You can have an OK team and a buggy and incomplete product but if the market is great and you are the best product available success can happen both suddenly and quickly.

“The term product/market fit describes ‘the moment when a startup finally finds a widespread set of customers that resonate with its product’.” Eric Ries

Rachleff writes that “You know you have fit if your product grows exponentially with no marketing. That is only possible if you have huge word of mouth. Word of mouth is only possible if you have delighted your customer.”

“Once a company has achieved product market fit, it is extremely difficult to dislodge it, even with a better or less expensive product.” Andy Rachleff

taking the most powerful and compelling aspects of the product and delivering them in the form of ‘WTF’ level features that are not merely compelling – they rise to the level of changing people’s points of view about what’s even possible and create intense delight in customers.” To reach that level, the target isn’t just product-market fit, but “product-market scale,” observes Casey Winters.

“Product/Market Fit Myths: Myth #1: Product market fit is always a discrete, big bang event; Myth #2: It’s patently obvious when you have product/market fit; Myth #3: Once you achieve product/market fit, you can’t lose it; and Myth #4: Once you have product/market fit, you don’t have to sweat the competition.” Ben Horowitz

Constant adaptation is therefore required to retain PMF.

It means getting to the point where the market accepts your product and wants more of it.” Fred Wilson

One of the most common ways that startups die is “premature scaling,” a term first used by Steve Blank. A business is “scaling prematurely” if it is spending significant amounts of money on growth before it has discovered and developed PMF.

“Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely… In our dataset we found that 70% of startups scaled prematurely along some dimension. While this number seemed high, this may go a long way towards explaining the 90% failure rate of startups.”

As an entrepreneur there’s always the temptation to grow the sales team at the first sign of revenue traction, but there is always the danger that this early traction is coming from the subset of the market that are early adopters and not the actual market itself.

too often I’ve seen startups ramp up sales before they’ve figured out the most efficient way to achieve profitability.

if you look at this list of reasons why startups fail from CB Insights, premature scaling is not even listed but is perhaps buried in other categories

Once a company has PMF it still must find a sustainable growth model and create a moat against competitors and so on. What PMF does do is help prevent businesses from spending money trying to grow a business (often inorganically) in a way that is doomed to fail.

“In general, hiring before you get product/market fit slows you down, and hiring after you get product market fit speeds you up. Until you get product/market fit, you want to a) live as long as possible and b) iterate as quickly as possible.” Sam Altman

“Founders have to choose a market long before they have any idea whether they will reach product/market fit.” Chris Dixon

The key point Dixon makes is that founders have control over this by thinking carefully about what they’re trying to do and why. There is also founder-market fit.