[HN Gopher] The Arc Product-Market Fit Framework
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The Arc Product-Market Fit Framework
Author : msolujic
Score : 100 points
Date : 2024-04-13 04:55 UTC (18 hours ago)
(HTM) web link (www.sequoiacap.com)
(TXT) w3m dump (www.sequoiacap.com)
| altdataseller wrote:
| I wish they discussed startups that didn't require a lot of
| capital or even bootstrapped startups. But of course they're a VC
| firm so of course they can't
| Terretta wrote:
| This sounds a little nutty but if you want to be a bootstrapped
| Rippling, it's possible.
|
| A trick I've found repeatable is to find an enterprise that
| doesn't shy away from big budgets (where six and preferably
| seven figure budgets are fine even for unproven vendors,
| because what's big/existential for you is
| negligible/experimental for them), and is willing to buy a
| product from you that requires "integration" (they love to
| spend money on integration, plus that means it doesn't work on
| day one!), where the "integration" cost is enough to bootstrap
| the product AND integration (and your ramen!) at your internal
| rates.
|
| To avoid the bootstrap money going to overhead, to keep the
| money for product build (engineering instead of paperwork), you
| need to avoid getting "risk managed" like a mature vendor. Its
| best for you to be a pilot, or proof of concept, or pet project
| for a sponsor to show a concept they want the enterprise to do.
|
| Pick your customers and product integrations carefully where
| the work will pay for the enterprise capabilities most likely
| to win your next sale. Use these big contracts like lilypads to
| cross the pond to the other side of Geoffry Moore's "chasm"
| between early adopters and early majoriy.
| omneity wrote:
| > find an enterprise that doesn't shy away from big budgets
|
| How do you identify such enterprises?
| lelanthran wrote:
| > How do you identify such enterprises?
|
| Impossible, unless you already have an in with someone high
| up in the management chain to approve your $1m/3months
| proposal.
|
| Enterprises that don't shy away from big budgets have a
| constant stream of multiple suitors all thinking the way
| you are, many of them more experienced with doing this as
| well.
| extr wrote:
| In case anyone was wondering how to make such
| connections: attend a top 5 MBA program or have a long
| history in management consulting, preferably both.
| vinay_ys wrote:
| A nice framework that's constructed retrospectively. Will it hold
| true in the future, maybe, maybe not. The thing that makes the
| most difference are not these broad ontological things, but short
| time horizon tradeoff equations around talent/skills available in
| the market, access to early customers and who/what they want,
| your personal network, your innate temperament/mindset in making
| day to day decisions.
| _pdp_ wrote:
| There is also luck.
| max_ wrote:
| The word luck has no meaning. Otherwise everything is luck.
| safeimp wrote:
| I think where luck should be considered is possibly around
| timing but otherwise luck will only get you so far.
| klabb3 wrote:
| This rings true, but understates just how important timing
| can be. A difference of just a couple of years can be
| enormous.
| SCUSKU wrote:
| Obviously coming from Sequoia there won't be an bootstrapped
| approach, but I'd love to see one for that.
|
| For bootstrappers, the approach I've heard of is simply just
| nicheing down to find a segment of the market that is big enough
| to support you, but small enough to not be worth it to bigger
| players.
| geoffreypoirier wrote:
| Well put! Nice framing.
| user_7832 wrote:
| > For bootstrappers, the approach I've heard of is simply just
| nicheing down to find a segment of the market that is big
| enough to support you, but small enough to not be worth it to
| bigger players.
|
| Thank you, as someone hoping to bootstrap myself this is makes
| sense. Any idea how to make the niche smaller? The broader
| market I'm thinking of is huge (likely billions of customers),
| I suppose I could charge more to narrow it down but that has
| other risks.
| DelaneyM wrote:
| Pick one single customer and fanatically meet their
| individual needs. Then add a second. Repeat until you're no
| longer needing to tweak your system to delight a new
| customer. At that point you need sales and you have a
| business! :)
| DenisM wrote:
| You will quite likely end up with a non-scalable "services"
| business instead of a scalable "product" business. I did.
| user_7832 wrote:
| In the idealized solution that I would build/provide, I'd
| already be meeting the needs of many individuals with
| "just" one top-of-the-line product. The only issue, and the
| need for quotes, is because this no-compromise product that
| would likely be competitive with the best in the industry,
| would also be quite expensive.
|
| This, fortunately or not, kind of circles back to the "make
| more expensive products" aspect.
| esafak wrote:
| Take the intersection of two categories.
| threeseed wrote:
| This has little to do with whether you are VC backed or
| bootstrapped.
|
| The amount of effort to sustain yourself is going to be almost
| the same regardless of which category you are in. Either you
| have a category that is popular but will attract dozens of
| competitors no matter how small your niche is or you have a
| product that requires effort to market.
|
| These days with so many no/low-code tools getting a product
| into market has never been easier. And that's both a positive
| and negative for bootstrappers.
| jamesblonde wrote:
| For our company we are in 2 phases. In the cloud, it's 'hair on
| fire'. MLOps is a hot space. For on-premises, MLOps is basically
| download MLFlow and Kubeflow and you think you're sorted. So it's
| the 'hard fact' segment.
| richardw wrote:
| Not on premises who are regulated and might have enterprise
| requirements. If you need eg role based access control you
| can't use on prem MLFlow etc. So you could niche down to
| customers who don't know this yet. Smaller banks, insurers etc.
|
| Edit: we went through this. Started putzing around with open
| source things on prem on Openshift. Ended up on Databricks for
| a variety of reasons. The impact on the business to be wiring
| up lots of new widgets, maintaining them, training, ability to
| switch to new components when required. Lean team, so turn
| Databricks on and secure it properly, exclude PI where
| possible, sort out ETL and CICD etc, profit. Delegate MLOps
| stack innovation to the vendor and focus on our own job.
| curo wrote:
| I'm curious how education or entertainment companies fit into
| this framework, or how they think about PMF in general.
|
| Was Duolingo targeting customers who accepted the "hard fact"
| that passive audio was the only way to learn a language? Was
| MasterClass a "future vision" because people didn't believe
| celebrities would spend their time teaching? Or is it that we
| NEED education and entertainment, so these two providers just
| differentiated from a crowded market.
| lukeahn wrote:
| Yeah, to me, Duolingo seems to be Hard Fact. But MasterClass
| might be also Hard Fact. MasterClass is not a totally different
| education service compared to the existing incumbents. Online
| university could be MasterClass.
| klabb3 wrote:
| Alternatively Duolingo sells a casual memory game that
| differentiate by giving the illusion of productivity. And
| Masterclass sells attention and status to a class of people who
| are already attention-oriented by stroking their egos. I'm not
| saying this hot take is necessarily true, but the market isn't
| always categorized by what we intuitively think. And realizing
| that can sometimes give you a massive benefit, simply by
| applying existing and effective techniques (in these cases
| gamification and people-oriented success storytelling,
| respectively) from a domain your competitors don't understand
| or care about.
| spxneo wrote:
| My perspective changed from thinking PMF was a lottery when in
| reality its just sales/marketing grinding until something works.
|
| The reason I used to think this is like other technically
| orientated founders. If I build for a market that doesn't exist
| then you are playing lotto. It's not even good odds, you are
| better off playing 0dte spx coin flip.
|
| What you fear you build for and if all you have are unknowns then
| you are going to simply end up building everything lose
| differentiation and your potential customers even if they find
| you will walk
|
| Despite classics like the SBF article that was taken down, this
| framework is quite good but the best thing to do as bootstrappers
| is to focus on generating net positive cashflow as soon as
| possible not running a PMF search engine which requires lot of
| minds and capital injection.
| threeseed wrote:
| It is a lottery though.
|
| My partner started a business and literally from her first ad
| she was inundated with customers. Now it's a $10m/year
| bootstrapped business. I've done exactly the same thing and had
| 0 customers.
|
| If you are falling into the Hard Fact / Future Vision
| categories it can very hard to get customers because no one is
| ever looking for your product.
| spxneo wrote:
| that just means she had the PMF to begin with
|
| if you done the same and have 0 customers that means you did
| something incorrectly.
|
| it is IMPOSSIBLE to do the same thing that works and net 0
| customers.
| ekianjo wrote:
| I think it is missing one category. VR for example may be on the
| future vision side but may end up only be a market niche.
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