Marketing-Market Testing-Product Market Fit

What the greatest technology investors say about Marketing-Market Testing-Product Market Fit


The following is a list of the post titles by author under this topic.  Scroll further down this page to find the actual blog post by your selected author.   Author’s posts appear in reverse alphabetical order.  For example, following this list, Fred Wilson’s post appears towards the beginning of the blog page, and Marc Andreessen’s posts appear towards the end of the blog page.


Marc Andreessen:  Do Whatever is Required to get to Product/Market Fit

Marc Andreessen:  What Causes Success

BRENDAN BAKER (1 post)     

Brendan Baker:  Traction is the Only Thing that Matters to Investors


Jeffrey Bussgang: Why Twitter Picked Fred Wilson as its Lead Investor

JEFF CLAVIER  (2 posts)

Jeff Clavier:  Jeff Clavier:  My Product Considerations

Jeff Clavier:  Jeff Clavier:  My Market Considerations

CHRIS DIXON  (2 posts)  

Chris Dixon:  Best Thing when Considering Raising Money

Chris Dixon:  Product/Market Fit: The Only Thing that Matters for a Startup

BILL GROSS  (3 posts)

Bill Gross:  Harness your User's Passion

Bill Gross:  Test your Customer Proposition

Bill Gross:  Focus is Always Better

 ROB HAYES  (2 posts)

Rob Hayes:  What Hundreds of Founders Have in Common

Rob Hayes:  Going for Growth vs. Revenue


Reid Hoffman & Ben Casnocha: Focus on Learning over Profitability

Reid Hoffman & Ben Casnocha:  Smart Adapting & Pivoting

Reid Hoffman & Ben Casnocha:  Pivot to Real Market Need

Reid Hoffman & Ben Casnocha:  Better To Be in Front of a Big Change than Behind It 

JOSH KOPELMAN   (2 posts)

Josh Kopelman:  Companies are Bought, not Sold

Josh Kopelman:  Invest in Teams that Adapt to Change

MIKE MAPLES JR. (1 post)

Mike Maples Jr.:  Develop Customers while Developing Product

DAVE MCCLURE  (1 post)

Dave McClure:  Startup Success Often Boils Down to 2 Things


Basil Peters:  Strategic Value Increases Valuation


Naval Ravikant: 5 Main Qualities of an Exceptional Startup

MARK SUSTER (4 posts)

Mark Suster: Early Stage Technology Investments Come Down to 4 'M's'

Mark Suster:  Be Leary of Too High a Price

Mark Suster: Go “Fat” after Hitting Product/Market Fit

Mark Suster: Successful Entrepreneurs have these Qualities

FRED WILSON (1 post)

Fred Wilson:  Management is Relevant when Building Usage

Management is Relevant when Building Usage

Fred Wilson venture capitalist and Co-Founder Union Square Ventures

Once the product has been built, launched and achieved ‘product market fit’, “it is time to get more users or customers [as the company enters] the “building usage” phase.”

This means the team must now be built including more engineers to scale the product/service and more employees in product, customer support, marketing and business development, sales (if an enterprise/SAAS focus) and administration.  Team size will at least double from building product’s stage with upwards of twenty when the building usage stage is exited.

Management issues herein: 1. managing engineering (where most of the headcount now is), i.e., recruiting, retaining and sometimes terminating engineers.  “[The] right people [must work] on the right things, [teams must execute and] the right environment” must exist for engineering success. 

“[Many] technical co-founders and lead engineers [don’t] enjoy managing.”  Wilson suggests helping a lead engineer become a good manager or hiring “a VP Engineering who is a great manager and move [the] technical co-founder or lead engineer into a more technical role [ i.e., CTO or chief technology officer]”. 

2. Founder/CEO’s challenge of navigating more direct reports. With potentially 10 + direct reports, a founder/CEO in management crisis can occur. Wilson suggests “find[ing] [team members with] management talent or inclination and invest in their ability to help [] manage the team” while “building communication systems, business processes, feedback, and routines [to efficiently scale the business and team].  [He] suggest[s] that founder/CEOs [][work] with coaches [to build management skills].” 

While stage 1 (building product) focuses on individual contributors and stage 2 (building usage) continues as such, management becomes relevant at stage 2.  “Strong individual contributors are often not natural managers”, presenting the CEO with challenges.  Fred Wilson  The Management Team - While Building Usage Jan. 9, 2012  ;


Successful Entrepreneurs have these Qualities

Mark Suster Partner Upfront Ventures and former entrepreneur

 Suster believes successful entrepreneurs have these qualities:  “1. tenacity, the most important [].  2. street smarts []” including “[] know[ing] [] how customers buy and how to excite them [], [an ability to] spot opportunities that aren’t being met and [] design products to meet these needs. []”. “3. ability to pivot []” which “[] might just be a totally different business model.[]”  “4. resiliency  []. 5. inspiration [].  6. perspiration [].  7. willingness to accept risk []. 8. attention to detail [].  9.  competitiveness []. 10. decisiveness []. 11. domain experience []. 12. integrity  []”.    Mark Suster, Entrepreneur DNA, December 15, 2009; What Makes an Entrepreneur (2/11) – Street Smarts December 16, 2009

What Makes an Entrepreneur (3/11) – Ability to Pivot December 17, 2009


Go “Fat” after Hitting Product/Market Fit

Mark Suster Partner Upfront Ventures and former entrepreneur

“[Suster] believe[s] that most companies can exist in the experimentation mode for 3-4 years. They should start “lean”.  If they hit a product /market fit (meaning you suddenly see a massive uptick in usage and/or revenue) then these companies need to go “fat”.  [Otherwise] industry titans around them will eat their lunch.”  Mark Suster, Changes in Software & Venture Capital- Part 2 of 3, June 29, 2011;

Note:  ‘Lean’ means minimizing resources as in the Lean Startup strategy espoused by Eric Ries author The Lean Startup.  ‘Fat’ means allocating significant resources to fulfill the mission.   

Be Leary of Too High a Price

Mark Suster Partner Upfront Ventures and former entrepreneur

 “[] [Suster has] seen a destructive cycle where otherwise interesting companies have been screwed by raising too much money at too high of prices and gotten [] [trapped] when [] markets correct and they got ahead of themselves [on inherent market valuation]. []

[It’s] OK to [] shoot for the “top end of normal” for the market conditions. [] [He] caution[s] entrepreneurs from [] raising money at significantly ABOVE market valuations. []

If [entrepreneurs] haven’t figured out product / market fit and therefore still have a highly risky business [they] run great risks for getting too far ahead [] on valuation. [] [Most] investors won’t want to [][do] a “down round,” which creates tension between them and early investors.

[] [Sophisticated] investors know [a major down round] is fool’s gold.  They get a cheaper price, [] wipe out much founder stock value and [] reissue [founders] new options. [Founders] take the money []” except their incentives get eliminated.

[] He advises “[] us[ing] competition to [][ensure] a fair price [and] rais[ing] a slightly higher round than [] [otherwise for some strategic reserve]. [] [One wants] to show an uptick in valuation [] for new investor confidence and to maintain [early investor relations].”  Mark Suster  Why Startups Should Raise Money at the Top End of Normal,  June 5, 2011;



Early Stage Technology Investments Come Down to 4 'M's'

Mark Suster Partner Upfront Ventures and former entrepreneur

“[] [Almost] all VC investments in early stage technology & Internet investments come down to just four key factors []: management, market, money [i.e., valuation] and above all else momentum [i.e., mostly product momentum]. 

[] The number one thing that investors get their checkbooks out [for is] momentum.  [Momentum has various definitions]:  user numbers, revenue, channel partners, biz dev deals, [etc.]. 

[] [Suster’s investment decision is based] 70% [on] management, 30% [on] product. 

[] [Almost] all VCs care about investing in big markets with ambitious teams.

[] Most VCs want to own between 20-25% minimum of [a] company. [] [Investors need to] own enough [equity] to make it worth their time – thus “money”. And all of this is wrapped up in forward progress that [entrepreneurs] demonstrate over time.”   Mark Suster, The Four Main Things that Investors Look for in a Startup,  October 6, 2010

5 Main Qualities of an Exceptional Startup

Naval Ravikant angel investor, Co-Founder AngelList and Venture Hacks and former entrepreneur

“[Ravikant ] broke down the 5 main qualities of an ‘exceptional startup,’ in the following order:

1. Traction
2. Team
3. Product
4. Social Proof
5. Pitch/Presentation

[] [Ravikant] explained [] ‘Investors are trying to find the exceptional outcomes, so they are looking for something exceptional [],[so] do one thing exceptionally.  As a startup you have to be exceptional in at least one regard.’”

Naval Ravikant, Anatomy of an (un)fundable startup by Babak Nivi on June 22nd, 2011,  Ravikant’s keynote speech at the 7th Founder Showcase Q2 2011;

Strategic Value Increases Valuation

Basil Peters angel investor and Principal Strategic Exits Corporation

Illuminating strategic value of an acquisition target can increase valuation.  “The only reason any company buys another company is because [it believes it] can increase the value of the company being acquired, and/or the acquired company will increase [its own value]. [] The most successful company sales [result in] the combination of the two businesses increas[ing] the total business valuation faster than either company could achieve alone. []

[Strategic value increases business valuation by] reducing competition [] [and/or cross selling or promotion of] complementary products or services. [] [Also an acquirer] that would like to develop a similar product or service [] will [often] pay to reduce []‘time to market’, [] [so] being fast is often better than being good.”  Incremental strategic value can show why “the business is worth more to [the prospective buyer] than to another bidder”, which drives why he’ll often pay more.  Basil Peters,  Illuminating Strategic Value When You Sell a Business,  August 1, 2009;

Startup Success Often Boils Down to 2 Things

Dave McClure angel investor and Founding Partner 500 Startups 

“The ability to get real-time data and feedback is unique to the Internet. [] you can take advantage of that and build better products by collecting real-time usage metrics and by making decisions based on measured user data.

[] What’s really hard is simplifying your product and building a great user experience.

It’s important to start by building a culture of feedback and measured analytics into your process and your organization. [] start-up success often boils down to your ability to do two things: make money and make users happy.  If you can figure out how to do both of those things at scale, then you probably have an interesting business []. Luckily, you can tell if users are happy or not by measuring their behavior.”   Dave McClure, Obsess over Metrics, pg 183-184  Do More Faster  by David Cohen & Brad Feld 

Develop Customers while Developing Product

Mike Maples Jr. Founding Partner Floodgate and former entrepreneur

“[The] most important thing that angel-backed founders could do to increase their chances of success [is to] do customer development in parallel with product development. [] [Businesses] don’t just create products, they create customers. [I’ll] ask an entrepreneur, What’s your customer creation road map [and how many customers will you have created this time next year?] [] A lot of people think customer development is interviewing customers or spending time with customers.  In my view, you’re trying to create customers just like you’re trying to create product, and you create them at the same time.”  Mike Maples, Founder And Managing Partner, Floodgate, July, 2010;

Invest in Teams that Adapt to Change

Josh Kopelman Partner First Round Capital and former entrepreneur

“As soon as you hit print on the business plan, things change.  Competitors emerge.  Technologies shift.  Regulatory changes [affect] your marketplace.  Key employees quit.  Macro-economic factors impact customer spending.  Shit happens.  I'd much rather invest in a founding team that shows an ability to adapt to change than one that claims to accurately predict the future. I believe that teams that are nimble, market-focused, and are willing to rapidly test/iterate/shift their plans are more apt to perceive the signals that the music may be stopping.” Josh Kopelman When the music stops... March 10, 2006;

Companies are Bought, not Sold

Josh Kopelman Partner First Round Capital and former entrepreneur

 “I [] believe that companies are not sold. They’re bought.

In every exit I’ve been fortunate enough to participate in – both big ( or Infonautics) and small (Turntide,,, e-Touch or Snapcentric) – the opportunity to exit was there only because we had begun to build a company that has differentiated technology, a strong team, offers customers real value, demonstrates traction in the marketplace, and/or solves a real need for the acquirer. You can’t build a company to sell it – I’ve never seen it work.”    Josh Kopelman, When the Music Stops…

Better To Be in Front of a Big Change than Behind It

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

“Plan A is what you’re doing right now. [] Within a Plan A you make minor adjustments as you learn; you iterate regularly.”

“[] [Should] you decide you need to make a bigger change, that’s when you pivot to Plan B. [] It’s changing direction or changing your path to get somewhere based on what you’ve learned along the way.”

“How do you know when to pivot from Plan A [] to a Plan B? [] You’ll rarely know for sure when to pivot or when to persist in what you’re doing.  In general, a lesson from the technology industry is that it’s better to be in front of a big change than to be behind it.  But the question of when to shift exactly is a question of both art and science, intuitive judgment combined with the best feedback or data you can collect []. [Expect] both good luck and bad luck along the way that will open and close unexpected windows of opportunity.

The common presumption is that you shift to Plan B when something isn’t working.  That’s frequently the case but not always. What you’re doing now doesn’t have to be failing for it to make sense to shift. [] If you find that the grass really is greener somewhere else, go there!”  Reid Hoffman & Ben Casnocha, book The Start-up of You, pg 58, 68, 70-71

Pivot to Real Market Need

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

PayPal a leading online payments company was acquired by eBay for $1.5 billion in 2002.  Yet PayPal initially was very different than today.

In 1998 Max Levchin and Peter Thiel “[create[d] a “digital wallet”- an encryption platform [] that [] evolved to software [] [for securely moving digital cash via a Palm Pilot] [one] of several iterations []”. The company grappled with finding a mass-market use case as the public wasn’t used to wirelessly and electronically sending cash.  Meanwhile eBay was growing significantly despite its inability to efficiently handle payments, even though “growing numbers of eBay users [tried] us[ing] PayPal to handle payments”[].  As a result “[] PayPal ditched the Palm Pilot app [] and focused on eBay]. [] It stayed true to [its] initial encryption roots while shifting to capitalize on what appeared to be the real market need.”  PayPal became a huge success, overcoming many challenges, including new management and losses from fraud.   Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 64-66, 68-70

Smart Adapting & Pivoting

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

Flickr is a popular photo-sharing website. Yet its founders Caterina Fake and Stewart Butterfield didn’t plan to start a photo-sharing site.

Begun in 2002 their original product was an online game played simultaneously by hundreds of players.  “[] the plan was to build [] less [of] a game and more [of] a “social space designed to facilitate and enable play”” with features to attract users, including photo-sharing.  When photo-sharing surpassed the game itself in popularity they had to decide whether to continue game development while expanding photo-sharing, or dedicate most of their resources to photo-sharing.  They pivoted from the original plan to focus solely on photo-sharing.  Its tremendous popularity resulted in Yahoo! acquiring it in 2005.  

“[] [its] evolution [] “is a case study in smart adapting: its founders [] tried many things to see what would work, and nimbly shifted their plans based on what they learned.”   Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 52-53  


Focus on Learning over Profitability

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

Start-ups believe that “[] technology companies focus on learning over profitability in the early years to maximize revenue in the later years.”  Reid Hoffman & Ben Casnocha, The Start-up of You (book) pg 60   

Going for Growth vs. Revenue

Rob Hayes Partner First Round Capital

When determining their business model Hayes advises entrepreneurs to consider whether it’s better to initially go for growth or revenue.  There’s conflicting advice on this issue.

Examples of business model strategies and how they played out when acquired:   Hayes believes Google’s $1.6 billion acquisition of UTube was visionary. “[] [Hayes] look[s] at what Google did with UTube [] and everybody thought [Google] was crazy [to pay $1.6 billion for it] and it was absolutely the right thing to do.”  Today UTube is certainly worth several times $1.6 billion. “[] [UTube was a] great buy. [Hayes] think[s] [the] Instagram [acquisition] may be along those same lines.”

Hayes believes the Instagram acquisition was also visionary.  When acquired by Facebook for $1 billion April 2012, the photo-sharing site was experiencing substantial growth but hadn’t generated any real revenue nor tried to make money.  Hayes believes that Instagram’s focus on growth was the right strategy because it was obvious it could eventually generate revenue by nominally charging for filters. 

“[] [If] how you can [eventually] make revenue is obvious, [] then focus on growth [] [and] user acquisition.  [] Distribution is the absolute hardest thing to do with an Internet company. [] [Focusing initially on generating revenue] slows growth and growth is what sells.  Growth is where you get the highest valuations.”   Rob Hayes  This Week in Startups, TWiST #249 Published Apr 18, 2012  @ 15- 20  min;

What Hundreds of Founders Have in Common

Rob Hayes Partner First Round Capital

“[One] thing that the hundreds of founders [he meets] each year have in common [] is that their plan is wrong. Sometimes it’s the big things, sometimes it’s the little things, but the plan is always wrong.  Founders who can pivot to a new idea given what they learn will survive their plan being wrong while those who believe that all signs pointing to trouble are wrong are not going to survive. []

[Here are lessons] that every founder should follow- start with a solid plan, but always listen to your customers, employees, advisors, and your gut.  When signals suggest that the path you are on is not going to take you where want to go it is time to pivot. 

So how do you pivot?  Always be ready.  Listen to your customers-they will tell you what they want.  And when the time comes, pivot clearly and decisively.  Understand what can be reused, what needs to be thrown away and what else has to be built.  Ensure that your team understands the pivot and is on board.  Manage your cash and make sure your business partners, including your board, understand [the pivot] and are supportive.  [Assess] whether you have the right skill sets for the new direction.

[] [Always] be assessing your situation and expect to pivot [to reach the destination].”  Rob Hayes, Do More Faster by David Cohen & Brad Feld, copyrt 2011, Pg 201-202 

Focus is Always Better

Bill Gross Founder and CEO business incubator Idealab

“Focus is always better. We were so worried we were going to pick the wrong focus . . .  it turns out that focus is so important, even if you pick the wrong focus you're doing better!  Doing fewer things extraordinarily well connects with the customer. This is a crucial lesson I took to later companies I started.”  Bill Gross,    BILL GROSS: Here Are The 12 Lessons I've Learned In My 30 Years Of Being An Entrepreneur, Dec. 15, 2011;;

Test your Customer Proposition

Bill Gross Founder and CEO business incubator Idealab

“Find a way to test your core proposition with your customer, then manage your resources to adapt after that. Don’t spend the money in advance. You have to test the real customer proposition. You have to make the example be the actual test.”  Bill Gross: Here Are The 12 Lessons I've Learned In My 30 Years Of Being An Entrepreneur,  Dec. 15, 2011;