Nothing Matters More than The Market

I’ve said we’ll be referring you to several of Marc Andreessen’s blog posts, and today I’m suggesting you read Chapter 4 in The Pmarca Guide to Startups: The only thing that matters.

Founding a company is like drinking from a firehose. Entrepreneurs often have a tough time prioritizing the many vital components of the startup business. As Marc writes: “You start to wonder — what correlates the most to success — team, product, or market?”

How you answer this questions will determine how you allocate your resources, man-hours, even certain aspects of your b-model or strategy.

Marc’s philosophy — informed by his own experience as a serial founder: Netscape; LoudCloud, which went public as Opsware, only to be purchased by Hewlett-Packard; and now Ning — is the best post I’ve ever read on why the market matters more than everything else, including your idea, your team, even your execution strategy.

Sound shocking? Borrowing from Marc’s analysis, I’ll boil it down to one sentence: even a great product, produced by a great team, will fail in a lousy market.

The inverse is not true, Marc explains in his post. In a good market, even mediocre products, and mediocre teams succeed.

In honor of VC Andy Rachleff, formerly of Benchmark Capital, who crystallized this formulation for me, let me present Rachleff’s Law of Startup Success: The #1 company-killer is lack of market.

Andy puts it this way:
* When a great team meets a lousy market, market wins.
* When a lousy team meets a great market, market wins.
* When a great team meets a great market, something special happens.

You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most. And neither a stellar team nor a fantastic product will redeem a bad market.

Read the whole or Marc’s post. But remember this: even if there is a great customer base out there with a big need; and even if you put together a great team to produce a great mousetrap to solve that need for them; in the absence a marketplace where your great team can “meet” the great customer and hand over your great mousetrap … none of it matters.

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