From skill set to mindset: why founder/market fit is a must-have entrepreneurial attribute
Today’s founders bear little resemblance to their predecessors — and that’s a good thing.
Enterprise tech companies aren’t what they used to be, and neither are their leaders. Consumers can be grateful for that.
It wasn’t long ago that strong-arm sales tactics — not superior products — fostered success. Vendors won by leading with sales, following with product, and layering on support to make products (somewhat) usable. Information access was asymmetric: sellers knew which features were most critical and which functionality actually worked and didn’t, but buyers’ knowledge was limited to what was pitched and promised. End-users, who were rarely the buyers, were often stuck using products they didn’t choose and oftentimes loathed.
The patriarchs of enterprise software took a muscle-man approach to customer satisfaction, creating an opening for the next generation of leaders in what I call the Customer Success era, led by Salesforce’s Marc Benioff and the other early SaaS providers who followed. In their heyday, the “Before Cloud (BC)” patriarchs that preceded Benioff understood and exploited their market positions. Companies and shareholders profited, but end-users were often unhappy captives rather than delighted customers of choice.
In today’s tech marketplace, products are bought, not sold, and consumers possess more power and leverage than ever before.
Three market forces have brought forth these user-centric changes:
- Thanks to the democratization of software development and delivery, a scrappy startup in Vancouver can build a better product than a well-resourced market leader in San Jose. Meanwhile, SaaS- and app-based delivery models enable customers to try out new products with little downside or risk, and app stores, online forums and social / performance marketing have reduced smaller companies’ barriers to discoverability.
- Access to information has become symmetric. Business intelligence tools and online product reviews on sites like Stack Exchange and G2 Crowd enable buyers to know the market better than ever. They know each products’ pros and cons, usage models, and customer wins and losses, as well as the reasons behind them.
- Consumerization of the enterprise, driven in large part by the proliferation of mobile technologies for personal and business use, has completely disrupted the way software is bought and sold. These days, sales decisions are often made directly or at least heavily influenced by opinionated and educated end-users.
Thanks to these trends, the product itself has become the sales tool — both the first impression of a company and the last impression before the purchase decision is made.
It no longer takes the loudest megaphone to be noticed. It takes the best product.
In fact, product as the first customer touch point is augmenting (and in some cases replacing) Marketing Qualified Lead (MQL) with the potentially more valuable Product Qualified Lead (PQL) as a key performance indicator in the customer acquisition funnel.
This shifting market landscape has led to a rethinking of what many investors like myself seek in entrepreneurs. The pendulum hasn’t simply swung from sales to product DNA; this shift goes further and is linked more to mindset than skill set.
Today’s founder holy grail can best be described as “founder/market fit” — an intense, deep-seated understanding of and compassion for one’s end-users.
These kinds of founders possess customer instincts so deeply ingrained that they can understand and predict customer behavior before competitors and often even before the customers themselves. As Steve Jobs once said, “You've got to start with the customer experience and work backwards to the technology.” Never before has that been truer than in software development today.
To name a few from our Trinity portfolio, the CEOs of Auth0*, Cohesity*, New Relic, Outreach* and WayUp* all exemplify founder/market fit. It’s not just that product, rather than sales, lies at the heart of their strategies. More than that, these leaders hold a differentiated view of, and authentic empathy for, the constituents they serve, enabling them to build products that delight users with superior functionality, usability, personality and, ultimately, magic.
- Outreach* CEO Manny Medina architected the product he craved for himself when he was a sole startup sales rep trying to multiply his efforts. He liberated end-users (in this case salespeople) by allowing them to leave behind products previously forced upon them by their sales managers.
- WayUp* CEO Liz Wessel is a millennial who resented job hunting using tools built before she was born, so she developed the mobile-first product she wanted to use figuring (accurately) that the corporate customers would follow.
- Cohesity* CEO Mohit Aron went after an audacious goal to revolutionize the storage ecosystem — a pursuit that few can envision and even fewer can execute. A storage expert himself, he was driven by fundamental questions that obliterated the status quo of a $50B market.
These entrepreneurs and promising leaders like them are building products that relieve pain points they truly understand in markets they love and understand. Their empathy and need to make a positive impact is so intense that it haunts their sleep and can’t be shaken. Unlike the salesmen of old, today’s rising leaders embody founder/market fit. And as consumers, we all benefit.
*I’m currently an investor in and/or on the board of these companies.