Fake product/market-fit โŒ (YC)

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In this talk by Michael Seibel, CEO of Y Combinator, the focus is on identifying and avoiding the trap of "fake product-market fit" in startups. He explains common symptoms and how to address them.
Published/Updated on Jul 21, 2021

A talk by Michael Seibel (CEO @ Y Combinator) on one of the biggest startup killers, fake product market fit.

TL;DR

One of the most common symptoms of pending death (aka fake pm-fit):

  • Raise money from impressive people

  • Raising an A-round pre PM-fit

  • Magical thinking (ignore fact or not measuring / understanding your customer)

  • Weak technical talent

  • More biz people than dev

  • No metrics dashboard (no ones looking at the numbers)

  • Too many nice things (nice offices, trips, dinners)

  • Flat graphs

  • Missing your estimates (and accepting it)

  • Changing KPIs

  • Investor = Boss

  • Co-founder conflict (invest in the relationship/clear roles of responsibility/trust in each other/unrealistic expectations/lots of fighting or no conversation at all) - roles and responsibility

  • Ordinary vs Extraordinary (copying those around you and expect success)

  • Slow Product Development (Features/ iterations / bug fixes don't ship)

WHAT TO DO ABOUT IT?

  • Pick an honest KPI (revenue!)

  • Track your retention regularly

  • Cap your burn (don't overspend until PM-fit)

  • Let salespeople pay for themselves

  • Learn about investors and bad investments

  • Talk to your customers (don't look somewhere else)

  • Track retention

  • Find smarter and more successful people to surround you with

  • Write specs, do sprints (weekly?), set deadlines, and include engineering in product decisions

  • Do quantitative and qualitative research

  • No one has done it before. Don't listen too much to others.