"“The most important thing I ever learned: No matter how ugly it gets, keep moving.” “Going backwards is not an option.”"

"What they both taught me the most and what they most have in common is when they get focused on something—creatively or passionate about anything in their life—that’s all they talk about and that’s all they live, breathe and eat."

"“My proudest thing in my career is that I was able to change it three times. And I’m happy about that, I couldn’t have done the same thing my whole life, I would’ve gone nuts. I couldn’t do it because I do things based on impulsive excitement and I’m just not that guy that can do something for 50 years and be excited about the same thing. I can’t do it.”"

"Mark Cuban said once that after you graduate from college one very valuable trick is to find jobs that pay you to learn."

"“Just because you did something once doesn’t mean anything. You have to be willing in your heart to begin again every day."

"“I’m interested in listening to the people who walk in the door. If your ego and your accomplishments stop you from listening, then they’ve taught you nothing. There are geniuses, savants; I’m not one of them. I work hard.”"

"“A diploma is really just your learner’s permit for the rest of the drive through life. Remember, you don’t have to be smarter than the next person, all you have to do is be willing to work harder than the next person.”"

"I do have one very unusual friend who almost never reads which astounds me since I read so much. He is nevertheless fabulously successful since he is nearly always around many smart people in cutting edge situations. He learns by taking to smart people. I don’t know anyone else like him, but he is an interesting case."

"That preference for a small number of talented relatively lazy people who still seek high quality outcomes is a very narrow exception, but it is an interesting twist."

"One slight variation on what I just said about hard work are a small number of founders and managers who sometimes seek out talented but “relatively lazy people” as employees since"

"Iovine is saying that you should let “the talent” do their job. Iovine’s point is reflected in an old saying that you are not going to detect burglars better than your dog."

"“Get in the room with the best people you can and open your heart, ears, and mind. Open up and learn. Be of service. Because if you’re of service, they will teach you. With Lennon and Springsteen and Smith, I knew that I had to be of service.”"

"“You can observe a lot by just watching.” When you get an opportunity like I have had in my business life to work closely with great managers and founders, what you learn is invaluable."

"One key thing you learn is that there are many ways to be successful."

"“Some of the best advice I’ve ever gotten [was] to look at the bigger picture.” “The thing about seeing the big picture and being self-aware is knowing that it’s not about you. It’s about the big picture. It’s not about you. It’s not. This is not about you.”"

"When you give to others in an intelligent way by being of service to them you inevitably get good things in return."

"“The real thing is that we are all frightened. If you are not frightened you are not original. Everyone’s frightened. It’s how you deal with that fear. It’s very very powerful. And what you’ve got to do is get it as a tailwind instead of a headwind. And that’s a little bit of a judo trick in your mind. And once you learn that, fear starts to excite you. Because you know that you are going to enter into something and try it and risk. And once you can get going, it’s a very powerful thing.”"

"“I live on the edge of this table, and if I get too comfortable on its surface, I lose what it is I’m trying to do. It’s all about balancing risk with overindulging on comfort.”"

"Nearly all of the great performers I’ve gotten to know — from athletes to artists to computer programmers to entrepreneurs — report a direct line between being happy, fulfilled and at their best and going all-in on something."

"If you find something you are passionate about not only does life get better but you do better work."

"“We love talking about starts and finishes, even though the middle stretch is the most important and often the most ignored and misunderstood. We don’t talk about the middle because we’re not proud of the turbulence of our own making and the actions we took out of despair.” “Creating something from nothing is a volatile journey.” “The first mile births a new idea into existence, and the final mile is all about letting go.” “No extraordinary journey is linear. In reality, the middle is extraordinarily volatile — a continuous sequence of ups and downs, flush with uncertainty and struggle.”"

"Business inevitably involves a never-ending series of idiosyncratic decisions for which there are sometimes best practices."

"This means that making decisions based solely on statistical factors and recipes is impossible. This is why business is best described as an art that is often informed by science."

"“The book is broken down into three sections of insights (Endure, Optimize, & The Final Mile).”“Every advance reveals a new shortcoming. Your job is to endure the lows and optimize the highs to achieve a positive slope within the jaggedness of the messy middle — so that, on average, every low is less low than the one before it, and every subsequent high is a little higher.”"

"“The start is pure joy because you’re unaware of what you don’t know and the painful obstacles ahead…. after the excitement of a new idea dissipates, reality sets in.” “This is where the journey truly begins.”"

"The reality of the zone which Belsky depicts in red in the graphic just above is that the team quickly realizes that creating a “new new” thing is hard."

"Some people have called this “trough of sorrow” or the “trough of despair,” but I believe a better term would be the “trough of reality.”"

"It is perfectly normal to think: “holy shit” during this process, but then to get to work creating value."

"People lose track of how much failure there is, but that is survivor bias, which is another topic I have written about before."

"“[Endurance] is about developing a source of renewal energy and tolerance that is not innate.” “Our additions to short-term validation that trying to defy it is hopeless…. You must hack your reward system [with]… manufactured optimism.” “Celebrate anything you can, from again a new customer to solving a particularly vexing problem.” “We crave certainty but must learn to function without it.” “Accept the burden of processing uncertainty.”"

"Every effective team I have ever observed has learned to manufacture milestones that create positive short-term reinforcement for the team along the way."

"It is no wonder that humans love immediate or at least near-term gratification."

"Rather than fighting these instincts Belsky believes the most effective teams create milestones that enable people to celebrate short term wins."

"“The greatest entrepreneurs are risk killers. They think about killing failure paths. They also understand that risk and value can change form. When risk has been killed then value has been created and a subsequent investor should pay a higher price for a percentage ownership interest in a business.”"

"If you create your milestones around killing or reducing technical, market, financial, people, regulatory and other risks you get a double benefit."

"People who are most effective on teams and the most effective teams separate discussion from energy and commitment. Amazon is well-known to have a culture that has adopted what they call “disagree and commit.”"

"This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?”"

"“Optimize the hell out of everything that works.” “When something actually works… you need to tenaciously evaluate it. Why did that work? How do you do it again? How do you spread it to your team?” It’s less about fixing what is broken and more about improving what works.” “The best teams …are never ever satisfied with the current state of their product.” “A/B testing is not just for digital buttons. You can use it in all areas of your life, from A/B testing your daily habits to how you team functions.”"

"“Resourcefulness > Resources.” “In the startup world, resources are like carbs. Resourcefulness is like muscle. When you develop it, it actually stays with you and impacts everything you do going forward.” “Resourcefulness also makes you more creative. Any good designer will tell you that creative constraints help the idea generation process. With fewer resources and options you become more creative with what you have.”"

"Businesses die more often from indigestion than starvation. Finding ways to grow without new resources is often what creates new value value."

"The arrival of people from a large business can be the kiss of death for a startup or small business since speed is a competitive weapon and cash resources are more limited."

"“Success fails to scale when we fail to focus.” “We navigate most of our lives and businesses with cursory knowledge rather than local knowledge. Only when we stick with and deeply explore one area, whether by choice or accident, do we learn better routes.” “Great products don’t stay simple by not evolving; they stay simple by continually improving their core value while removing features and pairing back aspects that aren’t central to the core. More once subtraction for every addition.”"

"Creating and staying within a circle of competence is a life and business superpower."

"“Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about. …coming up with likely outcomes and appropriate probabilities is not an easy task…the discipline of the process compels [you] to think through how various changes in expectations for value triggers—sales, costs, and investments—affect shareholder value, as well as the likelihood of various outcomes.”"

"“Indeed, new products win over users with their simplicity and add complexity over time to appeal to power users (and build a business), and then the process repeats itself. Teams that defy this practice continually simplify their products over time. For example, some teams try to remove or simplify features at the same pace as adding new features. Other teams attempt a reboot at some point in their product’s life cycle where they design a new version with a vastly simpler foundation."

"The first step is acknowledging when you’re catering too much to power users and failing to engage the latest cohort of new customers.”"

"Some of the most talented people making the right choices about what to add and what to remove have savant-like skills in accomplishing this objective."

"The best teachers know how to tell stories and the best founders and managers know that as an organization grows telling stories is often the best way to create a propagate culture."

"One solution fits all is not the way to go. All these cultures are different."

"“The more credit you need, the less influence you will have.” “A new type of professional has emerged in the twenty first century. You’ll find them working solo, in small teams or within large companies. “These ‘free radicals’ are the unbound energy sources of energy in the professional world.”"

"Another superpower in life for getting things done is to let other people take credit for something."

"“Foster Apprenticeship.” “A certain percentage of your energy should be devoted to mentoring others. Apprenticeships are mutually beneficial, as you’ll prepare emerging leaders on your team to take more senior roles while developing a culture of constant learning and teaching.”"

"How can scalable digital systems provide something that approaches or supplements this same luck that I experienced as an apprentice?"

"“Finishes come in all shapes and sizes and are never as certain (or desirable) as they seem. In fact, finishing should never be the end goal, and you shouldn’t aspire to ever feel truly ‘finished’; life loses value when the challenge dissipates.”"

"I believe the real “winners” in life are the people who accumulate the best stories based on real life experiences. This collection of great stories is an indicator that you never stop learning, creating and sharing."

"You can ask for tips, but you can’t adopt someone else’s approach in aggregate. More than anything else, the journey of building a company is really the construction of your own one-of-a-kind playbook to build a team, culture, and product."

"I believe that while there are best practices entrepreneurs and investors should be aware of there is no single recipe they should follow."

"By better understanding the views and experiences of a wide range of successful the reader can better discern which of many possible paths will lead to success."

"In other words, entrepreneurs and investors should learn from past successes, but also be prepared to break new ground."

"“I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person’s brain because it understands the most fundamental models: ones that will do most work per unit.” “If you get into the mental habit of relating what you’re reading to the basic structure of the underlying ideas being demonstrated, you gradually accumulate some wisdom.”"

"What you will need is greater knowledge and understanding of the models than the other people you compete with in a given activity like investing."

"Some mental models work better than others in some situations and knowing which models to use and when is a key part of good judgment."

"The process of acquiring wisdom is just that – a process. Acquiring wisdom takes time and effort."

"2. “You’ve got to have models in your head. And you’ve got to array your experience ‑ both vicarious and direct ‑ on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.”"

"Rather than just knowing the names of various mental models, Charlie Munger is very focused on acquiring a deep understanding of these models so they can help him better understand the world."

"From each discipline the thoughtful person draws significant mental models, the key ideas that combine to produce a cohesive understanding.”"

"Charlie Munger notes that some knowledge and skill acquisition happens based on personal experience and some vicariously through the experiences of other people. Watching other people make big mistakes is a lot less painful than making those mistakes yourself. Reading widely in a range of different domains is the most effective technique to expand the opportunities to learn from the experiences of others."

"3. “Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.”"

"Perfect recall of facts is not enough and Brooks found himself floundering in the classroom when asked to think and reason."

"To drive his point home, Charlie used a memorable metaphor to describe this interlocking structure of ideas: a latticework of models. ‘You’ve got to have models in your head,’ he explained, ‘and you’ve got to array your experience-both vicarious and direct-on this latticework of models.’"

"4. “What are the models? Well, the first rule is that you’ve got to have multiple models ‑ because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does.”"

"Charlie Munger is bringing up the tendency of humans to drift into dysfunctional patterns of thought like psychological denial when faced with something unpleasant."

"Using the right models can help you avoid what Munger calls “the psychology of human misjudgment.”"

"Focusing on having a sound decision making process rather than outcomes in any given case is wise."

"5. The models have to come from multiple disciplines ‑ because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense. They don’t have enough models in their heads. So you’ve got to have models across a fair array of disciplines. You may say, ‘My God, this is already getting way too tough.’ But, fortunately, it isn’t that tough ‑ because 80 or 90 important models will carry about 90% of the freight in making you a worldly ‑ wise person. And, of those, only a mere handful really carry very heavy freight.”"

"6. “When I urge a multidisciplinary approach- that you’ve got to have the main models from a broad array of disciplines and you’ve got to use them all – I’m really asking you to ignore jurisdictional boundaries. If you want to be a good thinker, you must develop a mind that can jump these boundaries. You don’t have to know it all. Just take in the best big ideas from all these disciplines. And it’s not that hard to do.”"

"Read widely and be curious. Think for yourself and be open to new ideas. Use many models from many disciplines when thinking about a problem."

"For example, when thinking about an economy or a business Munger has suggested it is useful to apply models from biology. Munger has said for example “Common stock investors can make money by predicting the outcomes of practice evolution. You can’t derive this by fundamental analysis — you must think biologically” and “I find it quite useful to think of a free market economy—or partly free market economy—as sort of the equivalent of an ecosystem.”"

"7. “You must know the big ideas in the big disciplines, and use them routinely — all of them, not just a few. Most people are trained in one model — economics, for example — and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.”  Munger believes that thinking clearly is a trained response. He points out that “if you want to become a golfer, you can’t use the natural swing that broad evolution gave you. You have to learn to have a certain grip and swing in a different way to realize your full potential as a golfer.”"

"8.”You have to realize the truth of biologist Julian Huxley’s idea that ‘Life is just one damn relatedness after another'”"

"“You must have the models, and you must see the relatedness and the effects from the relatedness.”"

"One of the most enjoyable thing about the lattice approach is when you see how “it all fits together.”"

"The more you know about more things in life, the more you see how it all fits together."

"The more you know, the more you know, that there is more that you do not know."

"9. “I’ve been searching for lollapalooza results all my life, so I’m very interested in models that explain their occurrence.”"

"One particularly important phenomenon related to mental models is what are called “complex adaptive systems.” If you adopt the model of complex adaptive systems you accepts the idea that the whole of many things is more than the sum of the arts and that there are many systems that cannot be modeled with certainty."

"“People calculate too much and think too little.”"

"10. “You need a different checklist and different mental models for different companies. I can never make it easy by saying, ‘Here are three things.’ You have to derive it yourself to ingrain it in your head for the rest of your life.”"

"Faced with the tendency of humans to fall down when making decisions based on the use of dysfunctional heuristics, humans can benefit from using tools or nudges to stay rational."

"11. “Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group … then to hell with them.”"

"12. “If you don’t keep learning, other people will pass you by. Temperament alone won’t do it – you need a lot of curiosity for a long, long time.”"

"“The theory of modern education is that you need a general education before you specialize. And I think to some extent, before you’re going to be a great stock picker, you need some general education.”"

"To use worldly wisdom properly you must be prepared to be a contrarian. Being a contrarian will inevitably sometimes make you unpopular or lonely."

"In the longer term you will ironically be more popular as long as you are right enough in your contrarian views. Of course, being a contrarian and wrong is not helpful and it is magnitude of correctness and not frequency of correctness that should be tracked on your scorecard."

"“It’s kind of fun to sit there and outthink people who are way smarter than you are because you’ve trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.”"

"“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.…so if civilization can progress only with an advanced method of invention, you can progress only when you learn the method of learning. Nothing has served me better in my long life than continuous learning. I went through life constantly practicing (because if you don’t practice it, you lose it) the multi-disciplinary approach and I can’t tell you what that’s done for me. It’s made life more fun, it’s made me more constructive, it’s made me more helpful to others, and it’s made me enormously rich. You name it, that attitude really helps.”"

"By the time I was evaluating this potential investment in 2002, I had become a disciple of Charlie Munger’s “lattice of mental models” approach to making decisions"

"One of the best descriptions of mental models I’ve seen is Nobel-prize winning social scientist Herbert Simon’s original framing of the concept, where he states that better decision makers have at their disposal repertoires of possible actions; checklists of things to think about before acting; and “mechanisms in mind to evoke these, and bring these to conscious attention when the situations for decision arise.”"

"a mental model isn’t a passive framework, it’s something to actively use in making decisions"

"One of the most important mental models in business is the concept of network effects"

"Nothing scales as well as a software business, and nothing creates a moat for that business more effectively than network effects"

"In tech, significant market adoption of a proprietary format or system can create a network effect and a competitive advantage for a business that is similar to supply-side economies of scale."

"Unlike supply-side economies of scale, the benefits of demand-side economies of scale can increase in a nonlinear manner, especially in software businesses."

"Some network effects are strong and some are weak."

"Some markets impacted by multi-sided makers with network effects are big and lucrative (e.g., ESPN or Bloomberg’s terminal business) and some are not (Yahoo Sports)."

"The Holy Grail for an entrepreneur is demand-side economies of scale that can cause a market to “tip”, giving almost the entire market to one company (winner-takes-all)."

"“By seeming to assure that the value of a network would increase quadratically — proportionately to the square of the number of its participants — while costs would, at most, grow linearly, Metcalfe’s Law gave an air of credibility to the mad rush for growth and the neglect of profitability. It may seem a mundane observation today, but it was hot stuff during the Internet bubble.”"

"“the value of a network of size n grows in proportion to n log(n). Note that these laws are growth laws, which means they cannot predict the value of a network from its size alone. But if we already know its valuation at one particular size, we can estimate its value at any future size, all other factors being equal…. The fundamental flaw underlying… Metcalfe’s law is in the assignment of equal value to all connections or all groups.”"

"the strength of network effects is not just determined by the number of participants in a network"

"What they found was that by 2009, Friendster still had tens of millions of users, but the bonds linking the network weren’t particularly strong. Many of the users weren’t connected to a lot of other members, and the people they had befriended came with just a handful of their own connections. So they ended up being so loosely affiliated with the network, that the burden of dealing with a new user interface just wasn’t worth it. ‘First the users in the outer cores start to leave, lowering the benefits of inner cores, cascading through the network towards the core users, and thus unraveling,’ Garcia told us.”"

"In a technology business, critical mass refers to the level of users that are required to help create a set of network effects that are so strong, that they build a moat for that particular business. Sometimes there is no second place in a market when network effects are that strong."

"Critical mass is present in a platform business if a sufficient number of users adopt an innovation in a system so that adoption of those innovations becomes self-reinforcing."

"“The tipping and de facto standardization of the VHS format in 1981-1988 is believed to have been caused by network externalities [aka network effects]. In the time period, watching prerecorded videotapes such as movie titles became the most important reason to use VCRs. Hence an increase in the users of VHS VCRs could raise a variety of available movie titles and thus the demands for VHS VCRs. That is, indirect network externalities became signification in the home VCR market.”"

"But in the case of complements that are different — such as game developers making games for Sony consoles before there were even a lot of consoles out there — how do you get one side (developers or console buyers) on board in the first place?"

"In Sony’s case, it sold game consoles at a loss to build up a base of users that would attract developers. As with all network effects, this eventually resulted in a flywheel effect where enough developers made enough games to attract enough users (players) which in turn attracted more developers and thus resulted in more games for more those players and a stronger user base for developers and so on."

"“When the value of a product to one user depends on how many other users there are, economists say that this product exhibits network externalities, or network effects.”"

"“A network effect exists when the value of a good increases because the number of people using the good increases. All things being equal, it’s better to be connected to a bigger network than to a smaller one. Adding new customers typically makes the network more valuable for all participants because it increases the probability that everyone will find something that meets their needs. So getting big fast matters, not only because it creates more value, but also because it assures that competing networks never take hold.”"

"“Network effects are tricky and hard to describe but fundamentally turn on the following question: Can the marketplace provide a better experience to customer “n+1000” than it did to customer “n” directly as a function of adding 1000 more participants to the market? You can pose this question to either side of the network – demand or supply. If you have something like this in place it is magic, as you will get stronger over time not weaker.”"

"“Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small….Paradoxically, then, network effects businesses must start with especially small markets. Facebook started with just Harvard students–Mark Zuckerberg’s first product was designed to get all his classmates signed up, not to attract all people of Earth. This is why successful network businesses rarely get started by MBA-types: the initial markets are so small that they often don’t even appear to be business opportunities at all.”"

"“…there are what I call groove-in effects tied to customers and consumers. Basically, this means that the more I use a product, the more I’m familiar with that product, the more convenient it gets for me. I use Microsoft Word. There might be a better program out there, but I know all the tricks with Word that I mastered over several years and I am very reluctant to give that up to start over with another product.”"

"“The answer [to creating a flywheel] lies in two essential variables: the size of the market and the strength of the value proposition. Any growth goes through an exponential curve, then flatters with saturation. If the ceiling of the market opportunity is $200 million, even if you get a flywheel, it will take you from twenty to sixty or seventy, then peter out because you saturated the available space. The bigger the market the more runway you have — so if you hit that knee of the curve, you can grow exponentially and keep going for a long time. Doubling a business of material size for three to four years leads to a really large, important company. That’s a key element in the flywheel idea.”"

"“Ultimately, we’re all social beings, and without one another to rely on, life would be not only intolerable but meaningless. Yet our mutual dependence has unexpected consequences, one of which is that if people do not make decisions independently — if even in part they like things because other people like them — then predicting hits is not only difficult but actually impossible, no matter how much you know about individual tastes. The reason is that when people tend to like what other people like, differences in popularity are subject to what is called “cumulative advantage,” or the “rich get richer” effect. This means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still. As a result, even tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors — a phenomenon that is similar in some ways to the famous “butterfly effect” from chaos theory.”"

"“There will be certain points of time when everything collides together and reaches critical mass around a new concept or a new thing that ends up being hugely relevant to a high percentage of people or businesses. But it’s really really hard to predict those. I don’t believe anyone can.”"

"“One clear lesson in the history of technology and business is that once an open standard gains critical mass, it is extremely hard to derail. The x86 computing architecture and the Ethernet networking standard are two salient examples of this truism. Once a single inter-operable standard gains the acceptance of multiple vendors in a marketplace, a consumer bias toward compatibility and scale economics create an increasing returns phenomenon that is nearly unassailable.”"

"“There seem to be ‘laws’ [of] social systems that have at least something of the character of natural physical laws, in that they do not yield easily to planned and arbitrary interventions. Over the past several decades, social, economic and political scientists have begun a dialogue with physical and biological scientists to try to discover whether there is truly a ‘physics of society’, and if so, what its laws and principles are. In particular, they have begun to regard complex modes of human activity as collections of many interacting ‘agents’ — somewhat analogous to a fluid of interacting atoms or molecules, but within which there is scope for decision-making, learning and adaptation.”"

"At a certain scale, a system reaches a critical mass or a limit where the behavior of the system may change dramatically. It may work better, worse, cease to work or change properties. Small interactions over time slowly accumulate into a critical state — where the degree of instability increases. A small event may then trigger a dramatic change like an earthquake. A small change may have no effect on a system until a critical threshold is reached."

"“Startups with a customer base need to maintain an ongoing dialog with their customers — not make a set of announcements when the founder thinks it’s time for something new. This is why entrepreneurship is an art. When you have a critical mass of customers, there’s a fine line between sticking with the status quo too long and changing too abruptly.”"

"“If you tell Facebook about your startup before you reach critical mass, you are an idiot.”"

"WHY MARKET MATTERS MORE THAN ANYTHING"

"1 “Give me a giant market — always.”"

"One way to look at venture capital investing and creating a valuable business is as an effort to build a stool with three legs: people, markets, and innovative products."

"While Valentine believed that yes, of course you need decent people, “the marketplace comes first, because you can’t change that, but you can change the people”"

"WHAT IS PRODUCT-MARKET FIT, REALLY?"

"A value hypothesis is an attempt to articulate the key assumption that underlies why a customer is likely to use your product."

"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."

"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”."

"THE PROCESS BEHIND PRODUCT-MARKET FIT"

"“You often stumble into your product/market fit. Serendipity plays a role in finding product/market fit but the process to get to serendipity is incredibly consistent. What we do is teach that incredibly consistent process.” Andy Rachleff"

"Similarly, Rachleff observes that “First you need to define and test your value hypothesis."

"The value hypothesis defines the what, the who, and the how."

"Startups should therefore start with the product and try to find the market, as opposed to starting with the market to find the product."

"It’s important to emphasize here that the iteration is more about the market and the business model than the product itself."

"“Product/market fit requires you to figure out the earliest tells.”"

"PMF emerges from experiments conducted by the entrepreneurs."

"Through a series of build-measure-learn iterations, PMF is discovered and developed during a process rather than a single Eureka moment. A-ha moments of inspiration do happen, but PMF is not created that way."

"HOW CAN YOU TELL WHETHER YOU DO (OR DON’T) HAVE PRODUCT-MARKET FIT?"

"“You can always feel when product/market fit isn’t 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’s 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. You could eat free for a year at Buck’s.” Marc Andreessen"

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

"But too often the focus is on latter part of the sentence (a product that can satisfy the market) and not the former (in a good market)."

"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."

"That success won’t last unless those products are fixed, but at least the business has the beginnings of something wonderful."

"“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"

"The “satisfy the market” part of the Andreessen definition is where the PMF concept necessarily starts to get qualitative."

"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.”"

"6 “The number one problem I’ve seen for startups, is they don’t actually have product/market fit, when they think they do.” Alex Schultz"

"And in fact, Rachleff has observed that this is where technology inflection points can play a role: “Truly great technology companies are the result of an inflection point in technology that allows the founder to conceive a new kind of product."

"Marc Andreessen writes: “In a great market — a market with lots of real potential customers — the market pulls product out of the startup.” Ideally in the easiest stages of a product development process pull is happening organically"

"COMMON MISCONCEPTIONS ABOUT PRODUCT-MARKET FIT"

"“First to market seldom matters. Rather, first to product/market fit is almost always the long-term winner.”"

"“Time after time, the winner is the first company to deliver the food the dogs want to eat.” “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"

"“creating a ‘dance’ between the product and the market”"

"It also involves 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"

"“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"

"“What matters is having forward momentum and a tight fact-based data/metrics feedback loop to help you quickly recognize and reverse any incorrect decisions.”"

"“Getting product right means finding product/market fit. It does not mean launching the product. 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.”"

"“Premature scaling is putting the cart before the proverbial horse…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."

"Additionally, too often I’ve seen startups ramp up sales before they’ve figured out the most efficient way to achieve profitability. A vicious cycle ensues wherein the more a company grows, the more it farther away from profitability it becomes.”"

"10 “In the early days of a product, don’t focus on making it robust. Find product market fit first, then harden” Jeff Lawson"

"If nearly everyone at the business is focused on trying to fulfill product demand instead of “siting around” trying to dream up new feature to create demand, there is almost certainly PMF — but the reverse is not the case."

"11 “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"

"When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required."

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