Dr Jagdish Chandra Rout
While all of us are well versed with the word ‘entrepreneur’ defining “an individual who creates a new business, bears most of the risks, and if fortune favours reap the benefits/dividends”, the trending term ‘start-up’ means “a new business venture” or “a new commercial/industrial project”.
Delving deeper while defining ‘start-up’, it has been lucidly explained: “Start-ups are not built to return profits immediately. The goal is to make the company public and profit that way. Small businesses usually don’t have investors and VCs (Venture Capitals) to worry about. They are also often set up to generate a profit right away because they’re following well-established business models.”
Notably, “Venture capital (VC) is a form of private equity and a type of financing that investors provide to start-up companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.”
As the portal of Silicon Valley Bank (SVB) portrays in the shape of key takeaways: –
1) “There are three start-up stages: early-stage, venture-funded (growth) stage and late stage.”
2) “An early-stage start-up begins with a scalable idea that attracts funding.”
3) “An early-stage start-up begins with a potentially scalable idea for a product or service targeting a market that is poised to generate value.”
4) “Building and deploying a product with early customers.”
5) “Demonstrating market-fit for your product/Proving out the sales dynamics that will support efficient growth/Ensuring you have the team in place to execute.”
Nevertheless, eminent entrepreneurs-cum-experts like Catalina Daniels and James Sherman bat for the ‘Product-Market Fit’ mantra.
According to entrepreneur and investor Marc Andreesen, the concept of product-market Fit’ means: “Finding a good market with a product capable of satisfying that market.”
It has also been described as “a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability.”
As found out while browsing Wikipedia: “Product-market fit has been defined by its inventor as a unique product offering that people desperately want. It is a first step to building a successful venture in which the company meets early adopters, gathers feedback, and gauges interest in its product(s).”
Also, it has been cautioned “to differentiate between product-market fit and problem/solution fit when measuring a company’s customer base, more specifically, when gauging a customer’s desire, companies need to be sure they are measuring desire for the product or service—not just for a solution.”
“Misinterpreting customer’s desire for a solution as desire for a company’s product or service will end up being a false positive for product-market fit,” the caution concludes.
As per the cautionary views reportedly aired by Wealthfront CEO Andy Rachleff, “Product-market fit is not binary. For a fledgling start-up, a minimum degree of product-market fit will not be adequate to achieve market traction and success. Rather, what is required is a high degree of product-market fit or extreme product-market fit.”
Yet another precious piece of advice by the Wealthfront CEO may be quoted below:
“Product-market fit is a process, not a one-time achievement. As markets, customers, and competitors shift, the product-market fit must be continually reassessed and pursued.”
(Dr Jagdish Chandra Rout is the founder and CEO, JB Consulting and Strategies)