How to Find Founder-Market Fit
Creating a startup in a market that suits you, defense & civil protection startups, Augmenta's acquisition, Silicon Valley Bank collapses, jobs, and more
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Defense & Civil Protection Startups
A list of startups with Greek founders enabling defense and civil protection use cases. Here's what the ecosystem looks like:
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Disclaimer: Funding information was gathered from public online sources, and for companies that haven’t publicly disclosed their funding amount or are bootstrapped, the equivalent field is blank.
How to Find Founder-Market Fit
Last time we discussed the early days of creating a startup, we highlighted some of the first big challenges: Validating ideas with customers, deciding when to launch, adding a co-founder, raising the first investor check, etc.
Today, we learn why a founder should be well-suited for the specific market they are targeting — an introduction to Founder-Market Fit. Mark Tsirekas is back in the newsletter for a guest post to explain why choosing the right market for you, the aspiring founder, matters and what to do if there’s Founder-Market (un)Fit. Handing over to Mark…
For years, everyone in startupland has been talking about Product-Market Fit. That magical moment when “you know you have it” or “your customers would be very disappointed if you didn’t exist”. If I could summarise this in a few simple words, it’s the feeling of making something a lot of people REALLY want. Product-Market Fit is hard, and no matter what process you use to get there, it’s an elusive concept. It will often take time for the market to drag you forward, countless iterations, and you will get stuck. But before you start thinking about Product-Market Fit, there’s the prerequisite that you, the founder, are the right person to take on this challenge. It’s finding Founder-Market Fit.
Perhaps the most important, yet under-appreciated, part of the business's success is choosing the right market for the founder. And it’s not a frequent topic of conversation. Early-stage investors, though, do understand this, and as such, they want to know at least two things:
Is this founder technically equipped, or even better, “the only one” to execute this problem? A perfect example would be Patrick Brown from Impossible Foods. A professor in biochemistry decides to start a plant-based burger which tastes and feels like real meat and to do this, he will produce a lot of heme from plants. The whole business is based on a scientific insight only someone with this background could have had, recruited a team for, and executed.
What is driving this person? How do we know they will keep on going when things get hard? Once more, Patrick Brown. To come up with Impossible Burger, Patrick took an 18-month sabbatical to think about where to focus his energy. He decided that starting this company was the best way to go about protecting the future of the environment.
Not every case is so clear-cut. Very often, a founder will stumble into an industry as a customer or have an itch they’re trying to scratch themselves. And then there’s a need to assess how well that person (you) can operate in this industry.
Is it a good fit for you, the human?
More often than not, we get excited about the idea, the product, and the customer and don’t examine the long-term match of the person in a particular market. However, if you are starting a business and you’re going to dedicate years of your life to it, you better make sure the everyday life in your chosen field adds rather than drains your energy.
A fundamentally wrong argument that can mislead is to think you will love the process no matter what. Yet the process is not an esoteric task; instead, it’s a by-product of the market you’re in.
It’s not apparent, and it’s easy to confuse. For example, you might think that a mechanical engineer would be an excellent fit for the automotive industry: (s)he has the credentials, the quantitative background, and might see solving hard problems as their mission and hobby. But what would every day look like? Would they thrive socially within a manufacturing culture ridden by safety and regulation? Is it possible to work remotely? What about dressing in a particular way? How does that affect the rest of the day? It might seem trivial from the outside, but it’s every day. And “every day” abides by the magical trajectory of compounding.
With that in mind, here are some thoughts on areas to research to conclude whether you’re a fit for a given market.
Market dynamics: What’s the market currently like? Is there fierce competition already? Is it a rapidly growing and nascent or a boring old market? Depending on the state of the market, you may be able to stay in stealth or need to go loud and quick. This implies a whole different setup, day-to-day life, and organizational structure. Think how Travis Kalanick executed during the early days of Uber as he attempted to disrupt a traditional industry like ride-hailing, where he had to go against powerful lobbies and unions. Certainly not a comfortable spot for most founders.
Business model: Your business model is not your revenue. It encompasses all the exchanges between people and systems to create (product), deliver (marketing) and capture (sales) value. As such, the founder’s obsession needs to serve the business model. When Jonah Peretti decided to start BuzzFeed, he was deeply interested in the mechanics of why people share content. Or take Ray Kroc of McDonald’s. Kroc was relentless in the pursuit of opportunity and deal-making — a salesman by nature. He grasped the potential of expanding McDonald’s from a nifty restaurant to a global phenomenon by selling to franchisees. That involved constant, ruthless deal-making. Now, imagine if they ran each other’s business. Not so obvious, right?
Key activities: Depending on your business model, you will have certain key activities that occupy your day-to-day. For instance, running a Sales-driven business is fundamentally different from leading an Engineering one: from HR to culture and from metrics to the amount of deep work. In a Sales driven organization, you get shorter reward loops, morale is crucial, and communicating expectations is necessary. And to run a top-tier sales organization, you will need a formula for your people, very aptly described by Marc Roberge in this book. On the other hand, if your business is Engineering-led, things might be different. Expect long reward loops, perhaps with no rewards for a long term, intellectually challenging conversations constantly, and an analytically driven mindset to prevail, so that product quality is maintained.
People and culture of the industry: Finally, the people and culture. Say you like finance. Do you like financiers too? Getting to like the people you will be selling or working with might be the most important thing. If you don’t enjoy your interactions, even if they’re minimal, it is bound to cost the business. At the end of the day, businesses are a bunch of humans together, and each business shares its own culture, rituals etc.
So, ask yourself: will you be happy in your market of choice, given the necessary responsibilities and the people that come with it?
If not, then you have a problem. In fact, I would argue it’s such a problem that you should focus on another business which feels like a great fit. Unless…
How to solve Founder-Market (un)Fit
Do you still want to go in? In that case, you need to think about yourself as a strategic orchestrator who puts the pieces together, less of the creator. Here are some suggestions:
Find a co-founder that is deeply entrenched in the industry. If the market you’re in is not a great fit for you, you can substitute some of the problems by getting a co-founder or senior executive to work alongside you. They can open doors, develop relationships, and generally do everything you dislike. Usually, it will be someone more senior with experience and interest to join a smaller company, and of course, you will need to be very persuasive because these people are hard to come by.
Get Social proof. Start with investors. Now, you don’t just need money. You need smart money. In this case, your investors signal to your market that you are important and worth listening to. Are you in Oil and gas? Get BP to invest in you.
Get influencers and create thought leadership. Then, you invest in thought leadership. If you can’t be the voice, use your resources to befriend those that are and get endorsements.
Build a strong executive team who does fit the bill. Find ambitious leaders who want to do things differently or influence the company's direction from the beginning.
Conclusion? It is going to cost more, feel uncomfortable, and place higher demands on you as you will need to fundraise differently, hire differently, grow a larger team and a brand early on, etc.
There you have it. Founder-Market Fit. It can make or break your business, so ask the hard questions and ask them early. In the end, you need to feel good to perform well.
Looking for your next career move? Check out job openings from Greek startups hiring in Greece, abroad, and remotely.
Industrial giant CNH Industrial acquired Augmenta, a hardcore climate tech solution powered by computer vision and big data, for $110m and will set up an R&D hub in Athens. At Marathon, we have been blessed to be the first and largest investor in the company.
Miroculus, a biotech company developing automation solutions to streamline next-generation sequencing protocols, was acquired by liquid handling instrumentation firm INTEGRA Biosciences.
Buy now, pay later for B2B purchases Two announced an €18m Series A round.
Natech, a provider of core banking systems to small and medium-sized financial institutions, raised €10m.
Bach, an app for planning bachelorette trips and group travel experiences, raised $9m.
A few months after announcing its $6.2m seed round led by a16z, Clerk raised a $15m Series A for its authentication and user management solution for React.
Adding to a $38m Series B extension round, personalised nutrition startup ZOE raised $2.5m.
Coolset raised €1.5m to help SMEs measure, analyze, and reduce their carbon footprint.
MyTeam, a startup streamlining the daily operations of sports clubs, received a $300k investment.
Vacation itinerary platform, WeAreTravelers, received investment from DayOne, Genesis Ventures’ accelerator program.
Interesting Reads & Podcasts
The impact of Silicon Valley Bank’s collapse on startups in Greece and Europe by Apostolos Apostolakis, Partner at VentureFriends (link).
What the future holds for Skroutz with George Hadjigeorgiou, co-founder & CEO of Skroutz (link).
Software supply chains and ecosystems with George Gousios, Chief Researcher at Endor Labs. (link)
Measuring developer productivity by Alex Harris, founder & CEO of Adadot. (link)
Y Combinator's startup playbook by Ekin Burak, VC at LAUNCHub Ventures. (link)
What does Bitcoin actually fix with George Kaloudis, Senior Research Analyst at CoinDesk. (link)
“Open Coffee Athens #112 – Food & AgTech” by Open Coffee on Mar 30
“Quality dashboards that stick” by Business Intelligence and Analytics Athens on Mar 30
“MIT Global Startup Workshop” on Mar 30-31
“PLG Disrupt” by Product-Led Growth Hub on Apr 21
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