Wrapping up the first weekend of PMF Method and feeling so excited for these founder journeys! In Session 2 we talked about “dollar-driven discovery” — how to validate that customers will truly need and pay for your product. This means before jumping on customer calls to validate your startup idea, you need a hypothesis. Who’s your buyer? What critical problem will it solve for them? Most founders stay at the surface level, using one liners like “we’re the first [X] to enable [Y]” during customer calls. At First Round Capital we developed a framework called the 4 P’s to help founders dig deeper: persona, problem, promise and product. Taking time to validate your 4 P’s with customers is how you’ll stress test whether you’re building something that customers truly need. In Session 3 we covered markets, which is a critical (but often underdeveloped) choice in company building. We don’t look at markets using high level TAM slides or McKinsey-ish top down numbers. Instead, we define a market as a collection of buyers who have a specific problem that your product solves, who buy software in a similar fashion, and who expect the product to provide value in a similar way. Given our definition, most generational businesses end up serving many adjacent markets over time. Some characteristics of a great market, starting with an initial white-hot center: • Enough buyers with an urgent problem to drive significant initial revenue, but ideally not enough that it’s saturated or obviously huge (and thus hyper-competitive) • Buyers are unhappy with the status quo…or the problem is very new • The category is entering a period of high velocity software adoption • Buyers have high (or at least medium) sensitivity to product quality • Budget already exists or will be easy to obtain • There’s willingness to pay a price point that can support the right GTM modality We loved digging into the first 6 months of company building with this group over the past few days, covering "How do I tell if this path is going to lead to PMF?" "How do I know if I'm targeting the right buyer?" and "Is this actually a good market to be building in?" Excited to continue the sessions with the founders over the summer! More to come on positioning, customer discovery feedback and founder-led sales.
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Fractional CTO & Technical Project Leader
1moIs this only for portfolio companies? Looks amazing.