The most important thing about startups

Go-to-market is the single most important act for an early-stage startup.

Because product/market fit is the most important outcome for an early-stage startup, and a successful go-to-market plan results in product/market fit.

It’s even more important than revenue, and definitely more important than growth. In fact, growth without product/market fit can be harmful.

YCombinator famously says “make things people want”, and your go-to-market plan should be a scientific approach for figuring out exactly who those “people” are, and what they want.

What is go-to-market?

Go-to-market is the alignment of the why, what and who.

Why is the value proposition, the thing you will change in the life of someone, that they find valuable. It could be solving a problem, helping them succeed, or changing an emotional state.

What is the solution and product, or the way that you deliver on the promise of value. The way that you make the impact that you proposed.

Who is the market niche, the segment, or the clear set of people who you think will care enough about the value you propose, and will find your solution & product relevant and accessible enough to pay you money.

Getting these three things to align perfectly is a monster task, one that many startups fail to do.

How to do it

While the actual hard work and creative thinking will be left to you (sorry), there are some very practical actions that I can advise. Here is my methodical approach to give structure to the process, and help turn it from a confusing stumble into a set of scientific experiments.

Define everything

The first thing you must do is clearly define everything, and write it down. A simple but powerful step. It amazes me how many founders I speak with who have not simply written down who they are trying to help, and what value they are trying to give. I created a simple template for myself that I call “the source of truth”, and it includes the following:

1. Mission - what do you fundamentally want to do? What drives you to work on this instead of anything else? The mission for The Haul is to help individuals build a career in entrepreneurship.

2. Market niche - be as clear and specific as possible. Contrary to what investors may lead you to believe, small and focused is better. You want to simply have a path to a large market (or not, depending on your aspirations. Not every business needs to be a unicorn)

3. Problem - the problem that you believe the individuals in your market niche have. Note that this problem should include a person, not a general problem. eg. “Senior tax accountants spend 20 hours per month organising papers” is good. “It takes a long time to organise papers” is bad. A good problem statement very naturally leads you to a validation action. eg. Find senior accountants, talk to them, see if they agree, how much it pains them, and how they (try to) solve it today.

4. Value proposition - what is the value that you think they care deeply about? Enough to pay you. eg. Turn 20 hours of document filing work into 5 minutes.

5. Solution - what is the solution you have in mind, that delivers the promise of the value proposition. Note that this is not the same as Product. eg. automate the categorisation with AI.

6. Product - how you deliver the solution. This is separated from solution, because there may be different ways to achieve the same solution with different products. eg. a mobile app that each accountant has on their phone.

Assume you’re wrong

After defining everything, you should now acknowledge that everything is probably wrong. Your mission now is to go and collect evidence to either prove or disprove your theories, while trying to reduce bias as much as you can.

Starting with market niche and problem is a good idea because if the people don’t actually have the problem, or acknowledge it, then there is no point figuring out an elegant solution or beautiful product. Nobody buys a solution to a problem they do not have.

Validate quickly and cheaply

This is your time to be creative and innovative. It’s your job to create experiments to test if you’re right about everything you wrote in your ‘source of truth’.

I suggest testing each element individually, or at least in small bundles of 1-2 things. You will likely find that you are correct about some things, and incorrect about others. If you bundle too much together, it’s hard to know which one is right or wrong.

The more you can understand each element on its own, the more agile you will be able to be. For example, you may discover that you are correct about the market niche, problem, and solution, but the product idea doesn’t really work. That’s great! You can now iterate on your product idea with confidence that you’re on the right track with the other parts.

Common experiments include building an MVP, doing a smoke screen test with a landing page, and running founder-led sales before you have a product.

A quick note on MVPs: It’s important to note that the point of an MVP at this stage is not to drive revenue or growth — it is not your v1. It is purely to test your hypotheses and learn, so that you can pivot quickly. If you spend too much energy on your MVP, you are not validating quickly and cheaply. The term ‘minimum’ in this respect means the least amount of time and resource to learn and prove/disprove a hypothesis.

Iterate and pivot

A pivot can be seen as keeping all factors the same except one. For example, you may find that for your mission of helping young adults become financially independent that your solution of increasing financial literacy makes sense, but your product idea of running weekly classes didn’t work out. Another product idea may be to build a mobile app that includes gamification, so they can learn on their devices while commuting.

Same mission, same problem, same solution, but different product.

By changing one factor at a time, you can operate more lean and agile. Changing one thing is easier than changing everything.

How to reach people

At an early stage, especially while you are pivoting quickly and learning if your hypotheses are true or not, you should focus on things that do not scale (another important piece of advice from Paul Graham of YCombinator) and provide a tight feedback loop. For example, running founder-led sales allows you to be literally in the room (or at least video call) with someone from your target market, to watch their facial expression and hear their feedback. You can ask follow up questions, and explore their psychology in real time.

You should not bet on scaled marketing efforts. The reason is that you don’t know yet about the key factors that go into a successful marketing campaign: who you’re reaching, what they care about, how to write copy that resonates. You have unvalidated guesses.

If you attempt to scale your efforts based on unvalidated guesses, you’ll just waste your time and money getting it wrong or at least sub-optimal. You may also create a confusing stance for yourself in the market, if you continually change your messaging and positioning while you learn.

Don’t give up so quickly

Jen Abel mentions that product/market fit is almost always found in adjacent markets. This is also true of solution and product concepts. You’ll almost never get it right on the first try, but instead will strike something if you’re iterating, listening carefully, and consciously testing your hypotheses without bias.

While there are no guarantees in the startup world, and the odds are typically stacked against you, there are most definitely things you can do to increase your chances. Applying structure like this to your early efforts is one of them.

Good luck out there.