I first met Varun Mehta in the late 1990s, when he was VP of engineering at FastForward Networks, one of the success stories in Accel’s portfolio. When he went on to co-found Nimble Storage in 2008 with talented technologist Umesh Maheshwari, I was excited to invest. By 2013, Nimble was a multi-billion dollar publicly traded company, and is widely regarded as a major innovator in enterprise storage.
In this article, I'll go over some of the insights and advice that Varun shared with us as part of his Founder Docs series. Like so many of the founders of Wing's portfolio companies, Varun has invaluable experience in startups and business building, and he brings a unique perspective to building innovative products that meet market demands. In fact, Nimble itself pivoted rather dramatically as it developed its core product, after realizing the initial product was too narrow in scope and with too small an addressable market. Varun and his team took the courageous step of recommending we kill this product before it even GA’d. Tense discussions ensued! I was watching closely to try to understand the depth of their conviction and the rationale behind it—“pressure testing” as my co-investor and friend, the great Jim Goetz, put it kindly.
Varun and Umesh stuck to their guns and eventually convinced me and the rest of the board. It’s rare to encounter a team with such intellectual honesty and conviction! I learned a lot from Varun in those exchanges, and in the amazing startup journey that followed.
I studied Latin for 7 years. “Sine Qua Non” can be roughly translated as “without this thing you are totally f*ckd”. That’s how I feel about product market fit. Varun has had PMF, and also floundered without it. In Varun’s Founder Docs, he shares his insights on the importance of getting product-market fit right as early as possible in the startup journey, and what to do when you’re struggling to find it.
Having witnessed firsthand how PMF (or lack thereof) can catapult a startup to stratospheric success or doom it to obscurity, I can assure you that Varun's advice is invaluable for anyone embarking on the startup adventure. You can read all of Varun’s Founder Doc articles here.
PMF: The make-or-break factor for startup success
Evaluating an investment opportunity involves examining a lot of variables. Having the right team in place is non-negotiable. However, I also need to know that the founders not only have a great product, but that they’ve also validated the market demand for that product.
Like Varun, the strongest founders have deep expertise in both technology and go-to-market strategy. So when Varun emphasizes the importance of PMF when building a business, he knows what he’s talking about.
“Too many startups rush into launching before they have PMF, only to realize later that they’ve built something no one wants,” he says. He notes that no matter how much funding a new venture raises, even with a superstar team, it simply won’t take off without the right PMF.
But Varun is quick to point out that PMF failure isn’t just a problem for startups. "PMF failure can happen to any company, regardless of size," Varun says. (Check out his full article to learn about some surprising PMF misses.)
Fortunately, Varun offers some excellent strategies for avoiding the pitfalls of poor PMF. Let’s look at a few.
Engage before you build
As Varun knows well, lack of alignment with the right target market is a leading cause of startup failure. Part of the problem is that many founders, especially technical ones, have a strong impulse to build their product before they have a thorough understanding of their target market’s needs.
“A failure to generate customer engagement is at the heart of most PMF problems,” Varun said. According to Varun, one of the key strategies for countering the “build it first” bias is to build a customer community first.
Getting deeply familiar with your prospective customers, and diving into their current frustrations and needs, is essential—and this should happen before the team puts in any major engineering efforts.
"It's far better to put in the work upfront to find the right fit before blowing your budget selling a product that won't get traction."
This is especially important when you’re looking to gain a foothold in a new market. "Venturing into a new market,” Varun said, “can be fraught with uncertainties. There are no existing customers, no clear market leaders to challenge and often no blueprint on what to build."
10X your competitive edge
As Varun points out, achieving PMF in an existing market is often easier than breaking through in a new market. That’s because demand for the product has already been validated to some extent.
But that validation can be a double-edged sword: "A great insight isn't enough if you can't easily build a product that will outpace the competition.”
He cites his own company, Nimble Storage, as a case in point. “We had a big advantage when we were getting started: There was already a storage market, and we had a deep understanding of that audience, what their needs were and what they were already buying. We just needed to figure out where our product stood in comparison to our competition."
One guiding principle that Varun champions is the 10X rule: "To remain competitive in an existing market, you’ll need to be 10 times better than your competition." In other words, finding PMF might not be as challenging in a market that’s already well-established, but it means that you need to find a way to stand out way above the crowd to get traction.
Iterate to innovate
As a startup founder, when you realize that you aren’t getting PMF right, you need to think about changing things up. As Varun points out, the required changes could be big or small.
"Iteration could mean a complete overhaul or subtle tweaks, but it's all aimed at aligning your product more closely with market needs." As part of your iteration strategy, Varun suggests thinking about changes in three key areas:
- Your product: Do you need to adjust one or more features to meet your customer’s needs?
- Your message: Are you communicating the real value of your product in a way your customer can grasp?
- Your target market: Is there another market segment or customer base that would benefit more from your product?
Not surprisingly, it all goes back to engaging with your target audience.
"Listen to your customers, and be prepared to pivot based on their feedback, because that's how you'll inch closer to PMF."
Read Varun’s article on when and how to pivot for more in-depth insights on getting to PMF.
Advice on PMF from an expert
If finding PMF is something your startup is wrestling with, I can’t recommend Varun’s full articles inside Wing’s Founders Docs collection enough. These documents are a goldmine of practical insights and strategic advice for working through the challenges in launching and growing a successful startup, from someone who has worked in the startup trenches.