My views on market validation have changed with age. What I've observed after talking to hundreds of founders is that it's now so easy for someone to enter a market that it seems like those that are successful are the ones who managed to _create_ their market. No matter how smart or how good your idea is, many many successful ventures are successful because of some intangible / hard-to-reproduce circumstance that allowed them to create the market. It could be investor /pr momentum, connections, regulatory friction or some other intangible, but whatever it is - it's not something that could be easily reproduced because it's nuanced for every founder and company.
Markets are formed from societal conditions, businesses emerge within that. Nobody "creates a market" - not even market makers. What you're observing is the discovery of a series of repeatable process that perfectly match the ability for 2 or more parties to exchange value in a safe and understood manner relatively to the period in time. The systems and processes are all relatively the same in most business regardless of industry or size, what differs is: nuanced for every segment and therefore SAMs, TAMs, TAMs of TAMs. Said simply: being the first to find the right product-channel-timing fit for demand that already existed in some form.
This one strikes straight to the heart. We pivoted post YC batch to what was hot at the time and saw a lot of competition (some raising millions more than us). We thought this market validation. Five years later, almost every single company on that list has either died or pivoted.
I mean, markets and industries change as well. Companies that have product market fit today can find themselves having to pivot as the sands shift under them.
I've been building startups for 15 years now and through a lot of pain, reflection and study have learned:
- markets are patterns in what people are trying to get done (importance / satisfaction)
- having an objective to validate a market is foolish for startup founders, maybe it makes sense as DD for vcs but they never do it, which is also foolish (founders should be trying to discover and understand markets, not validate them)
- getting good at quickly discovering and seeing truth in markets is a skill that can be developed, and is extremely valuable for engineers to learn
- opportunities are all about timing, and requires knowing about lots of markets and lots of tech and seeing how they can come together
- the timing is all about knowing how good tech needs to be to be better at getting customer job done, which requires understanding tech and empathy for customers (or luck)
- pmfit failure rate is so high because most founders don't even know what a market is
not an expert by any means but just my 2 cents, if a guy is willing to enter their cc and pay for your product, there is no bigger validation than that. everything else feels like smoke and mirrors to me
The corollary that trips people up: the absence of competition is also not validation. I have seen founders interpret an empty market as 'huge opportunity' when it actually meant 'nobody wants this.' The only real validation is someone paying you money. Everything else is a proxy.
Why not check your passion and interest regardless of presence/lack of competition and then you can play a long game instead of being in a reactive state.
Being passionate and interested in a problem doesn't mean there is a market for said problem. This doesn't mean that it's not valid to feel that way, but a viable business might be hard if not impossible to build in that niche. Maybe I'm passionate about and interested in ornamental gourd futures [0], doesn't mean it's a way to build a business.
very valid point- but people do start with passion and iterate being the keyword based on understanding users and the market - however if you jump straight into competition/market without having interests or passion then you are driven by numbers and other people and have nothing to fall back onto in terms of purpose/vision/mission -
so someone passionate in ornamental gourd futures can use the passion in it to underdtand other peoples/passion or interests in it and then in the process develop your understanding of them to feed what they are looking for coming from your evolved passion now - youtube was hotornot pics to begin with!
This article is assume startup - you raise a lot of money and get a lot of people to help you build the product fast to get to the very large market. A valid strategy and can earn you a lot of money if there is a large market you can serve.
However there are a lot of markets that are not that big. If your passion is something Pet Rocks - that will probably be a tiny market (it was once big for a short time, but the time is over and unlikely to come back - thought maybe I'm wrong). You are unlikely to every grow a large business because there are so few other people interested in your passion.
There are other markets where your interest/passion will make one person a nice income, but can never scale to a large company. The investors this article is concerned about want nothing to do with it: they can never make their investment back. However you as a person can make a lot of money in this niche self funding the company and growing no faster. It will be hard work, and it will only get you into the lower end of the upper middle class, never rich - but that can be a nice life.
Or you can discover the hard way there is only so much you can take of your interest before you burn out.
then you can passionaltey study people and find if they are not passionate in your passion then what passions they have and make their passions evolve your passions to passionately help their passions.
Sure, monopolies are great for the C-suite, but they turn out to be really bad for the end users and customers, the real losers when there is no competition.
Get in loser, we're going for a monopoly! It's all fun and games until you're locked in and enshitification sets in. I would sooner go without than get fooled again.
My views on market validation have changed with age. What I've observed after talking to hundreds of founders is that it's now so easy for someone to enter a market that it seems like those that are successful are the ones who managed to _create_ their market. No matter how smart or how good your idea is, many many successful ventures are successful because of some intangible / hard-to-reproduce circumstance that allowed them to create the market. It could be investor /pr momentum, connections, regulatory friction or some other intangible, but whatever it is - it's not something that could be easily reproduced because it's nuanced for every founder and company.
Markets are formed from societal conditions, businesses emerge within that. Nobody "creates a market" - not even market makers. What you're observing is the discovery of a series of repeatable process that perfectly match the ability for 2 or more parties to exchange value in a safe and understood manner relatively to the period in time. The systems and processes are all relatively the same in most business regardless of industry or size, what differs is: nuanced for every segment and therefore SAMs, TAMs, TAMs of TAMs. Said simply: being the first to find the right product-channel-timing fit for demand that already existed in some form.
"Don't worry about people stealing an idea. If it's original, you will have to ram it down their throats."
i guess its called the unfair advantage and there is even a book by the same name!
This one strikes straight to the heart. We pivoted post YC batch to what was hot at the time and saw a lot of competition (some raising millions more than us). We thought this market validation. Five years later, almost every single company on that list has either died or pivoted.
I mean, markets and industries change as well. Companies that have product market fit today can find themselves having to pivot as the sands shift under them.
I've been building startups for 15 years now and through a lot of pain, reflection and study have learned:
- markets are patterns in what people are trying to get done (importance / satisfaction)
- having an objective to validate a market is foolish for startup founders, maybe it makes sense as DD for vcs but they never do it, which is also foolish (founders should be trying to discover and understand markets, not validate them)
- getting good at quickly discovering and seeing truth in markets is a skill that can be developed, and is extremely valuable for engineers to learn
- opportunities are all about timing, and requires knowing about lots of markets and lots of tech and seeing how they can come together
- the timing is all about knowing how good tech needs to be to be better at getting customer job done, which requires understanding tech and empathy for customers (or luck)
- pmfit failure rate is so high because most founders don't even know what a market is
Ignore the competition. Dont ignore their customers.
If they don't have customers you won't either.
If they don't have customers, they aren't competition.
not an expert by any means but just my 2 cents, if a guy is willing to enter their cc and pay for your product, there is no bigger validation than that. everything else feels like smoke and mirrors to me
The corollary that trips people up: the absence of competition is also not validation. I have seen founders interpret an empty market as 'huge opportunity' when it actually meant 'nobody wants this.' The only real validation is someone paying you money. Everything else is a proxy.
Yeah customers are market validation, not merely the existence of competition.
If your competitors have customers, I think that is a sign of market validation. If they do not, then you might not either.
Why not check your passion and interest regardless of presence/lack of competition and then you can play a long game instead of being in a reactive state.
Being passionate and interested in a problem doesn't mean there is a market for said problem. This doesn't mean that it's not valid to feel that way, but a viable business might be hard if not impossible to build in that niche. Maybe I'm passionate about and interested in ornamental gourd futures [0], doesn't mean it's a way to build a business.
[0] https://www.reddit.com/r/wallstreetbets/comments/kzoh1c/i_am...
very valid point- but people do start with passion and iterate being the keyword based on understanding users and the market - however if you jump straight into competition/market without having interests or passion then you are driven by numbers and other people and have nothing to fall back onto in terms of purpose/vision/mission - so someone passionate in ornamental gourd futures can use the passion in it to underdtand other peoples/passion or interests in it and then in the process develop your understanding of them to feed what they are looking for coming from your evolved passion now - youtube was hotornot pics to begin with!
Depends on your passion/interest.
This article is assume startup - you raise a lot of money and get a lot of people to help you build the product fast to get to the very large market. A valid strategy and can earn you a lot of money if there is a large market you can serve.
However there are a lot of markets that are not that big. If your passion is something Pet Rocks - that will probably be a tiny market (it was once big for a short time, but the time is over and unlikely to come back - thought maybe I'm wrong). You are unlikely to every grow a large business because there are so few other people interested in your passion.
There are other markets where your interest/passion will make one person a nice income, but can never scale to a large company. The investors this article is concerned about want nothing to do with it: they can never make their investment back. However you as a person can make a lot of money in this niche self funding the company and growing no faster. It will be hard work, and it will only get you into the lower end of the upper middle class, never rich - but that can be a nice life.
Or you can discover the hard way there is only so much you can take of your interest before you burn out.
then you can passionaltey study people and find if they are not passionate in your passion then what passions they have and make their passions evolve your passions to passionately help their passions.
competition is for losers. https://www.wsj.com/articles/peter-thiel-competition-is-for-...
Yes, let's look to the founder of Palantir for life advice. Great plan.
He'd be fairly good for business advice though
Sure, monopolies are great for the C-suite, but they turn out to be really bad for the end users and customers, the real losers when there is no competition.
Get in loser, we're going for a monopoly! It's all fun and games until you're locked in and enshitification sets in. I would sooner go without than get fooled again.
Please read the article before responding.
The paywalled, appeal to authority article?
So, you didn't read it either?
> appeal to authority
Very true, reading the article before commenting is definitely not for "free thinkers".
That's not what i quite meant, but yeah. Competition is good for consumers.
HN is a site aimed at future C-suiters and those who willingly make them rich. It's on target.
Ctrl-F: "Customer" (2 results) [both describing customers as a fungible always present entity that must deal with you].
Yea.. maybe change your focus?
But I thought money comes from investors?!?