A very good friend of mine, albeit much younger and itching to start his own technology company, sent me Marc Andreessen’s article about product-market fit and posted by Stanford University. He asked for my perspective after having founded my own cloud-based company and exiting successfully. Before that I had the opportunity to work for the likes of Steve Jobs (at NeXT that Marc points to in his article) and Eric Schmidt (of Google but then at Sun) and Scott McNealy, and I should mention my startup experience with Jonathan Schwartz as it was life changing.
First, there is no reason to ever sit on the other side of Marc’s position. The person is brilliant, accomplished, pragmatic, and I think humble enough for his ideas to be approachable. So let’s start with Marc being right because he is Marc.
Second, Marc is right because he is right. He absolutely over simplified and to be transparent, I thought the first half of his essay was circular in that it seemed that his idea of a market is people who want to buy your product. I wish it were that easy. He dismisses unorthodoxly the idea that talent is everything. I remember when Steve Jobs started his company – NeXT — that is all he cared about. There were twelve interviews to get into his start up and that last was with Steve himself. So Steve believed in talent. That said, NeXT didn’t go anywhere, not because of lack of market (Sun and Dell did quite well) but because of exactly what Marc says – the product-market fit. Steve’s computer was priced for Wall St. and initially targeted at education. But dear lord that product was good.
Third, Marc is right because again he is being pragmatic. A successful founder will have the personality and the perseverance and the ability to listen to adjust – adjust, adjust, adjust, – until the right combination of product and market is achieved. When Lighthouse was acquired by Sun Microsystems, I was young and decided to meet with and ask the key stakeholders about Sun’s success and what I needed to do to be successful. When I asked Eric Schmidt who at that time was the CTO of Sun (a Stanford startup, SUN stands for Stanford University Network) he said something astonishing to me. I thought he would say it was their mastery of technology, or their understanding of how to drive market share. Instead, Eric Schmidt, who can buy Canada right now with his shares of Google, said it was their direct sales force. He explained that Sun had to change directions four to five times to hit that product-market perfection that Marc talks about in his essay. It was the channel that had the customer relationship that allowed them to do that.
So Mark is right. But I do not agree that it is more paramount than talent. Let’s say for argument it’s a tie. If you read Scott McNealy’s biography or Steve’s you will see that these special personalities with conviction and perseverance and vision were the sole reason for getting through the shoals of fate. There is a story I remember of Scott, founder of Sun, who was running out of cash and chased a make or break deal. The deal walked so he got on a plane and tried to meet the person. They refused. So he camped out for a week on the curb until someone else in the company asked him what was going on. Scott explained and the person took him in and eventually he signed a completely different deal, saving the company.
Incidentally, when as a young person I asked Scott McNealy the key to success he told me that as CEO his responsibility is three things: 1. Be the face to your customer and meet them and know them. 2. Have a relationship with capital whether you need it or not – cash is king. 3. Always be talking to your talent and looking for new talent – talent, he said, was key.
So to answer my friend’s question, yes, I believe through my experience that Marc is right. That said, I would also ask, could Ringo Starr have created the Beatles? Or did it have to be John Lennon?