Back in the day, I was looking into entering the weight loss market with a SaaS solution or coaching services. In theory, it sounded like a great idea. I based it on a “signature success” story of my own. Based on that success, I thought I could provide value, help others achieve the same. But I overlooked the importance of founder market fit.
What I didn’t consciously realize was that most of that actual market was very different from me. I was a young, somewhat nerdy guy, the type of guy who got excited about techie stuff and spreadsheets. And that’s how I achieved what I did in the context of weight loss.
At the time, you could easily buy paid Google advertising. It was a learning environment where I tried a lot of the techniques that are now part of the Launch Tomorrow method: driving traffic to landing pages, getting sign ups, interviewing customers and gathering surveys, and using it all to pre-test and build up a marketing message. Use spreadsheets and numbers to figure it out. After some desk research, I put up a survey and bought google ads on keywords related to weight loss.
But the weight loss market, the people who were actively spending money and trying to change the fact they were overweight, were women roughly twice my age. Even though being overweight equally affected both men and women across the age ranges, the _market_ was very different. The ones willing to spend money. After doing all this market research, I realized my survey responses mirrored market research reports. Roughly 90% of the market was female. Not 50-50, as I implicitly expected at first. Then I connected the dots that 89% of the survey responses were from women twice my age living in small towns.
Given that was true, I was at a natural marketing disadvantage right from the beginning because I was harder to relate to:
- I’m not a doctor and I’m not planning on going to medical school just to look credible
- I’m not a woman and I’m not planning on becoming one for the purposes of this startup idea
- my approach of apps and spreadsheets wouldn’t have naturally appealed to this market anyway, so they were likely to struggle with my process and not have it solve the problem.
It would have been a hard sell, and also likely to be less effective than it was for me. I’d lost faith that I’d be able to achieve results sustainably for this market once I realized the nature of the market. These natural disadvantages I had in this market were ones that I couldn’t easily change about myself. Best to cut my losses and get out. Founder-market fit wasn’t there. In this case, it had marketing implications for me as a as a founder and being perceived as a relatable expert entering a market, even though I knew my process/product was effective. It was a great market, just not a great market for me to enter, at least as a solo founder.
Hence the importance of “founder-market fit”
Josh Kopelman, co-founder of First Round Capital, posits that:
6/ Most founders spend <5% of their time on idea [market] selection, yet I believe that “the pick” accounts for >50% of startup success/failure 7/ Observation #1) Many founders rush “the pick”. If you’re spending the next 5-10 yrs of your life doing something, pick your idea wisely.
Choosing the right market to pursue is one of the key decisions an early stage founding team makes. Even though there are a lot of considerations, fortunately you can iterate to the right combination for you and your team with systematic testing. And the founders themselves are an important part of that decision, which they often miss (as I did above).
The startup world bandies around the term “founder/market fit” (FMF). Founder/market fit: the founders have a deep understanding of the market they are entering. They have relevant knowledge, skills, and experience. Besides that, they have strengths or characteristics. Ultimately, these founder factors help them gain a natural competitive advantage. Build a moat. Theoretically, anyone can test a market test in the abstract or hire an agency to do it for them. But there are markets which a specific founding team will be more likely to succeed in, based on founder/market fit.
And as venture capitalist Chris Dixon says, founder/market fit can serve as a leading indicator “of whether a startup will achieve product/market fit”. Successful founders use their experience to prevent premature scaling. They find it easier to test a value hypothesis using customer discovery, because they have ready access to customers.
There’s three major reasons why getting founder-market fit right makes a difference:
- Strongly tied to how founders expect to acquire customers
- Choosing a high growth market
- Getting the right founding team composition for your business model
Strongly tied to how the founders expect to acquire customers
Here’s why: founders often default to what they know. They expect to acquire customers from market segments they can reach easily, especially if short on time. And if a segment fits well, growth is easier to execute. If founders can build on pre-existing contacts and specialized knowledge, for example enterprise purchasing processes, this can be a major feather in their caps. At least compared to founders who are green. The marketing and sales knowledge in particular is important, particularly in relatively established markets: