Theoretically, any startup team will range from exceptionally flawed to outstanding. The product they make will range from hardly functional to a masterpiece, and the market will range from senseless to booming!
There is an unbelievably wide difference in the success rate of startups: some are ridiculously successful, some extremely successful, many somehow successful, and a few simply fail.
There us also an extremely wide divergence of nature and quality for the 3 main elements of each startup: the product, the team, and the market.
Having said that; you start wondering: what relates most to the success of a startup; the product, the team, or the market? What results in success? What’s the most dangerous of all: a weak product, a bad team or a poor market?
The Diameter of a Startup Team
This can be measured by whether or not the right choice of CEO, engineers, senior staff, etc. has been applied in relation to the opportunity in front of them.
Concerning a startup team, effectiveness is more important than experience. That’s because since the beginning of the technology industry, it has been proven that there are so many successful startups out there that had begun with staff who had never done it before.
The Quality of a Startup’s Product
This can be determined by how the impressive the customer finds the product. For instance, how easy it is to use or what features make it a rich one or even how fast it is? Also worth questioning is how many (if any) bugs does it have?
The Size of a Startup’s Market
This is the growth rate and number of the customers of that product.
Mind you, the quality of the product and the market size are totally different. The best example I can think of at the top of my head is the world’s best software application for an operating system that nobody runs!
So, the obvious answer to any entrepreneur or VC if you ask them which is more important: product, team or market, would be team. Which really would make sense, as in the beginning of a startup, you’d get to know more about the team than the product- which naturally hasn’t been built yet and the market not yet explored.
Looking from the engineers’ perspective, they’d probably say product is the most important. Which also makes sense because startups are the ones that invent products, customers buy and use them! so, literally, there’s no company without a product! Would a team really make sense without having a product?
Wanna know what I think is the most important factor in this equation? I think it’s the market that determines a startup’s success or failure. The reason is that I believe that the market is what pulls the product out of the startup.
The market will be fulfilled by the first viable product that appears. It doesn’t have to be a great one, it just has to be one that actually works. But when you do have a great market, the team will be very easily upgraded.
On the contrary, in a bad market you can have the best product there is and a fabulous team and still fail!
To make a long story short; the number one factor to kill a company is the market.
3 straight forward equations:
· Good team + bad market = market wins
· Bad team + good market = market wins
· Good team + Good market = something extraordinary comes out!
Therefore, again, market matters the most.
But yeah, you’re probably thinking to yourself now that the team is the thing that you can control the most, and everybody wants to have a great team, naturally. So, what do you actually get out of a great team? Hopefully, a good product and (fingers crossed) a great market.
A quote that comes to mind now by Tim Shephard is “a great team that will always beat a mediocre team, given the same market and product.”
Can Great Products Create New Markets?
Theoretically, yes. However, a product wouldn’t create a new market from scratch, no matter how good it is.
As a Startup, What Should I Do About All of This?
Andy Rachleff’s corollary for startup success is “the only thing tat matters is getting to product-market fit”. This simply means existing in a good market with the suitable product to satisfy that market.
Usually, you’d be able to tell when that’s not happening as the customers won’t be getting the value out of the product. The indicators for that would be that the product usage isn’t growing fast enough and the sales cycle is takes too long.
Unfortunately, lots of startups fail before achieving the product- market fit.
In my opinion, the life of a startup is divided into 2 phases: BPMF (before product-market fit) and APMF (after product-market fit).
During the BPMF you need to focus on doing whatever it takes to get there, that would include changing staff, changing markets, rejecting customers when you don’t really want to, rethinking about your product idea.
Ironically enough, if you come across the founder of a boomingly successful startup and ask him what the reason was behind this huge success, he’d list all sorts of reasons that have nothing to do with the main one: the product-market fit; when in fact it was THE MAIN reason for his startup to succeed!
But, if you think about it, what else could it possibly be?