Then, recently, the CEO of an early stage company I was advising suggested that people over the age of 40 could not qualify as entrepreneurs to invest in. Of course, being over 40, I disagreed – I was even slightly offended. But it made me think and ask the question ‘why?
We saw customers beating down the door to get the product, even though the team was not a killer team. Experience isn’t everything and effectiveness can beat experience (growth companies are full of successful examples of teams that have never ‘done it before’). However, there are plenty of stories of great teams that completely blew it – and great teams that executed brilliantly against declining markets and failed. Markets don’t care how smart you are. Whether you are Nokia or the best of the early-stage world. And many successful growth companies screw up along the way, with everything from their channel model to their pipeline development strategy to their marketing plan to their press relations to their compensation policies.
I started to question the bet on the team and was inspired by one of our VC gurus who suggested that the market was the most important determinant of success or failure: In a great market with lots of real potential customers, the market pulls the product out of the company. The market must be satisfied, and the market will be satisfied by the first viable product that comes along. The product doesn’t have to be great, it just has to work. The no. The No. 1 growth accelerator is the market, because the numbers speak for themselves – a market of millions of customers will always beat the smartest team of executives. IBM, Intel, Unilever – they all failed massively despite the superior intellectual capacity of their leaders.
To quote Andy Rachleff and Marc Andreesen:
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.
The most important thing is to get the product/market fit in the best market. It all goes back to customer discovery and customer validation. And you know when you are there: Either you see that customers do not value your product, word of mouth is not spreading, usage is not growing, sales cycles are too long and deals never close – or … customers are buying the product as fast as you can make it, usage is growing, customers are pouring into your bank account, you are hiring sales people, the media wants you …
Thanks to the CEO of the early stage company who insulted me, I have changed my bets on the market.