Common Founder Issue
I didn’t believe this when I started and this constantly surprises first-time founders, but a good general rule is that new startups will take about 18 months to find decent product-market fit. Sometimes it happens as quickly as 12 months and often (of course) it never happens, but 18 months is what I’d expect if I was starting something new.
Here’s what I see most often...
Initial excitement (month 1 to month 6) - You and your co-founder are finally able to focus full-time on your vision. You have a world of possibilities, so there’s a lot of dreaming and asking “what if” questions. Even though you are “playing startup” in this phase, it’s an important phase to develop your vision. Most business models I see in this phase are 70% complete…they typically are missing a solution to the most important friction in the model (watch video here for more on this).
Heads-down slog (month 7 to month 12) - You’ve decided your vision and started to focus on the main assumptions behind the business. Since most business models aren’t the correct ones out-of-the-gate, this is a mentally taxing time where the reality of finding product-market fit starts to sink in. Because (a) the initial excitement has worn off and (b) a lot more hard work and mental gymnastics are still necessary to figure-out the model, I consider this the worse phase of starting something new. For me the passion for solving the customer problem is what motivates me during this phase.
Reality hits (month 13 to month 18) - More often that not, once the 12-month mark hits you are very smart about your industry and you think you know the model that will work, but it wasn’t what you created during the initial 12 months. This is when you take a hard look in the mirror to decide whether or not you want to keep working on this problem. I’m constantly seeing examples of businesses that really figured-out the right business model somewhere between month 12 and month 18. This is not the exception...it's the rule. Then you spend six months validating your new business model assumptions.
Scale or move on (month 19 to month 24) - By month 18 the founders have typically moved on to other things or they’ve found product-market fit and are beginning to grow the business in systematic ways.
In this podcast, the co-founder of Stripe discusses how long it took for them to realize they had product-market fit. What most struck me is that after 24 months they only had 50 customers.
If you are a startup founder in month 9 of your slog, keep in mind that the founders of this recent unicorn were feeling exactly what you are feeling. And they were still at least 12 months away from knowing that they had something.
As a result of all of this, the advice that I give to new founders is to make sure you are prepared to go at least 18 months with your new startup. Ideally plan for 24 months.
The silver-lining here is that if your startup works then you'll be dedicating 5 to 10 years of your life to it. Just think of the first 18 months as creating the sustainable foundation necessary for this journey.
Love the problem.
At this point in the podcast, John is discussing the early market research that they did (which was pretty much just them wanting it to exist).
Get Right To The Point
I’d recommend listening to the entire thing, but to get right to the point go to minute 8:25 of this podcast.
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Thanks to these folks for helping us all learn faster
John Collison (@collision), co-founder of Stripe (@stripe)
Tina Seelig (@tseelig) of Stanford University (@Stanford)
Stanford ECorner (@ECorner)
Please let me and others know what you think about this topic
Email me privately at firstname.lastname@example.org or let's discuss publicly at @davempayne.