That customers love the product is only part of the product loyalty
Hi, I'm Ann.
I was one of the first investors in Lyft, Refinery29 and Xamarin. I've been on the Midas list for three years and was recently added to the New York Times' top 20 venture capitalists. In 2008, I co-founded Floodgate, one of the first seed-stage VC funds in Silicon Valley. Unlike most funds, we only invest in seeds. This makes us experts when it comes to finding a suitable product market and building a company with minimal profitability. Seed is fundamentally different from later stages, so we've made it more than a specialty: it's everything we do. Each of our partners sees thousands of companies each year before deciding to invest only in the top 3 or 4.
I have invested in the early stages of startups over the past 11 years. We saw how startups went right (Lyft, Refinery29, Twitch, Xamarin) and wrong. When I think about the failures, the cause is inevitably wrong ideas about the type of product market adjustment.
The magic of product market adjustment
Most successful entrepreneurs and VCs agree that the product market fits the Define the quality of a start-up at an early stage. When you enter the product market, you can be successful even if you are not optimized in other areas.
Most entrepreneurs think of the product market as the point at which some customers love the properties of their product. At Floodgate, we forensically analyzed the deceased companies and came to the conclusion that this conceptualization is wrong. Many failed companies had functions that customers loved. Some of these companies even had several popular features! We have found that customers only love the product part from product to market fit, not the whole thing. This raises the question: what were you missing?